Despite the current economic challenges in the UK, the 2022 bear market, and global uncertainties, recent data suggests British investors have high hopes for 2023 investment returns. But how far can they go?
A recent survey by eToro revealed that over half of UK share investors are optimistic about the investment market in 2023 and expect to make a profit. This is a significant increase from 2021, when only 33% of Brits owned stocks and shares as reported by Finder.
This article will provide a comprehensive outlook on how much Brits are expected to invest in stocks and shares in 2023. We will discuss the current state of the UK economy, the 2023 investment outlook, available investment opportunities, and stocks that we expect to increase in value in 2023. Continue reading.
Key Takeaways
- The UK investment outlook for 2023 is positive, with several potential investment opportunities available in different sectors and industries.
- Investors must consider economic recovery, interest rates, inflation, risk appetite, diversification, and investment strategies before investing.
- Companies such as Zoom Video Communications, Moderna, Tesla, Amazon, and NVIDIA are expected to perform well in 2023.
- The minimum investment amount required to buy a single share in the UK stock market varies depending on the company, but the average is usually around £10 to £50 per share.
The UK Investment Outlook for 2023
Since the COVID-19 pandemic in 2020, the UK economy has witnessed a challenging period with a significant impact on economic activity and employment. However, the economy has shown signs of recovery. Investors are increasingly contracting financial advisors, and there has been heavy investment in rental yields.
Several factors that make 2023 the rainbow year include:
- Economic Recovery: The global economy is expected to recover faster in 2023 than in 2022. In October 2022, The International Monetary Fund (IMF) predicted that the global growth rate would drop by 2.8% in 2022, and the decline would slow down in 2023 by 0.5% before climbing in 2024. This indicates investment opportunities.
- Interest Rates: Interest rates rose as high as 3.5% in 2022, and are expected to remain low in 2022. Some economists and banks predict it could rise as high as 5.2% in 2023. This means investors may need to be more cautious with their investment strategies and consider investing in fixed-income securities, such as bonds.
- Inflation: Inflation is another crucial factor that could impact investment opportunities in 2023. Bloomberg predicts inflation rates may start stabilising in 2023, falling as low as 2.1% in the fourth quarter. This could affect the performance of different asset classes.
Using these factors to project 2023’s investment outlook, it is safe to say there are several opportunities for investors to explore. Some of these areas include:
- Technology: With the increasing demand for digital services and products, companies in this sector are well-positioned to benefit from the continued growth of e-commerce, cloud computing, and artificial intelligence.
- Healthcare: The COVID-19 pandemic has highlighted the importance of healthcare. Now, companies involved in producing and distributing vaccines, medicines, and medical devices are likely to benefit from increased demand.
- Renewable Energy: With the growing concerns about climate change, renewable energy is likely to remain a key area of focus in 2023. Companies involved in producing and distributing wind, solar, and hydropower are expected to benefit from government investment and incentives.
- Infrastructure: The UK government has announced plans to invest in infrastructure projects, including roads, railways, and airports, which will likely create investor opportunities.
- Real Estate: The real estate market has been affected by the pandemic, but there are signs of recovery in 2023. With low-interest rates and increased demand for housing, real estate investment trusts (REITs) and property companies are likely to benefit from the rebound in the property market.
The UK economy appears to be on the road to recovery, and the investment outlook for 2023 is more positive than in 2022. The range of investment opportunities available provides the potential for investors to amass massive growth.
Investors Sentiments to Stocks and Shares in 2023
On the one hand, there is a growing interest in investing in the UK stock market. On February 16, 2023, the UK stock index closed above 8,000, and while this calls for celebration, a financial analyst expressed that the equities are still “incredibly cheap”.
The Bank of England’s forecast for 2023 puts a pin in the inflated hopes of investors from the last paragraph. Earlier in February, the bank raised its rate by 0.5% to 4% and expected the country’s economy to drop by a half percentage point. This forecast may influence the investment market as more investors seek to take advantage of potential returns.
In light of this positive and negative news, investors will consider specific priorities and strategies before investing. Examples of these priorities and strategies include:
- Risk Appetite: Some investors may be more comfortable taking on higher levels of risk for the potential of higher returns, while others may prefer a more conservative approach.
- Diversification of Portfolios: Investors will invest in a variety of stocks and shares to spread the risk and minimise potential losses.
- Investing in Tranches: Investing in tranches over time is another strategy that some investors use to manage risk and maximise returns.
- Historical Data: The historical average return on the UK stock market is around 5-7% per year, and this can help investors make informed decisions on potential returns.
The sentiment towards stocks and shares in 2023 is positive, with many investors looking to capitalise on the potential for growth in the market. However, investors must be reminded that investing in the stock market always carries some level of risk.
Which Stocks Will Increase in 2023?
How much you will spend on stocks depends on the rising stocks and opportunities you can find. Below are companies with potential for growth in 2023 according to British experts and investors:
- Zoom Video Communications (ZM)
Zoom Video Communications is a communications technology company that provides video conferencing software and cloud-based communication services. Despite the end of the pandemic, many businesses continue to utilise video conferencing and other remote communication technologies, which will continue in the coming years.
- Moderna (MRNA)
Moderna is a biotechnology company specialising in developing vaccines and therapies based on messenger RNA (mRNA) technology. The company’s mRNA COVID-19 vaccine was one of the first to be approved for emergency use and has since been distributed globally. As the COVID-19 pandemic continues to affect populations worldwide, the demand for vaccines and therapies is expected to remain high.
- Tesla (TSLA)
Tesla is an electric vehicle (EV) and clean energy company that designs and manufactures EVs, energy storage systems, and solar products. Tesla’s EV sales have steadily increased in recent years, and the company is expanding into new markets, such as China and Europe. As the world shifts towards a more sustainable future, the demand for EVs and clean energy products will continue to rise.
- Amazon (AMZN)
Amazon has been expanding into new markets, such as healthcare and finance, and investing heavily in research and development. As more consumers shift towards online shopping, the interest in Amazon’s products and services will remain high. Also, Amazon’s strong financial position and innovative culture give it a competitive technology advantage.
- NVIDIA (NVDA)
NVIDIA’s GPUs are widely used in the gaming industry, and its AI and autonomous driving technologies have applications in sectors such as healthcare and finance. As the demand for these technologies continues to rise, NVIDIA is expected to benefit from increased sales and revenue.
How Much Money Do You Need to Invest in Stocks UK 2023?
The amount of money required to invest in stocks and shares in the UK varies significantly depending on several factors. Further, the minimum investment amount needed to buy a single share varies across companies. But the average is usually around £10 to £50 per share.
For a well-diversified portfolio, investing a minimum of £500 to £1,000 in the stock market is recommended. This amount may vary based on an investor’s financial goals, risk appetite, and investment horizon.
Furthermore, the weight of an investor’s investment in a particular stock or industry can significantly impact their returns. Investing more in a specific company or industry may provide higher returns if the investment performs well, but it also increases the risk of losing more money if it fails.
Therefore, it is essential to diversify the investment portfolio by investing in various companies and industries to minimise the risk of losses. Besides, investing regularly in small tranches over time can help spread the risk and increase the potential for returns over the long term.
UK Investment: Rounding Off
The UK investment outlook for 2023 appears promising, with many potential opportunities for investors. While there may be uncertainties surrounding the future of the UK economy, investors can still find success by focusing on the right sectors, industries, and companies.
