Donald Trump’s chaotic handling of the conflict in Iran will drive cash into the UK stock market, a top banker has said.

Dave Mortlock, one of three managing partners at German investment bank Berenberg, said Mr Trump’s inconsistent messaging over Iran would add to existing fears about his erratic policymaking, prompting more investors to move money out of the US.

The UK’s stock market would be a likely candidate for these money flows, he added.

“People have been 85pc to 90pc weighted to US tech,” said Mr Mortlock. “That definitely started to change around this time last year through tariffs, the dollar weakening, and more anxiety about tech valuations.

“It’s no surprise that the FTSE’s done really well the last 12 months; then it starts to filter down the market cap spectrum, which we’re beginning to see in our trading flows.”

A survey of more than 400 global investors, representing over $1tn in assets under management, by Berenberg found that 38pc plan to increase their exposure to UK stocks over the next 12 months.

Of those surveyed, 63pc expect UK initial public offering (IPO) activity to rise, and 70pc have some appetite to participate.

Mr Mortlock was speaking at Berenberg’s annual UK conference, which brings together more than 300 investors in around 170 companies.

Other investors at the conference shared his view, saying the current chaos in the US was likely to boost London.

“Dollar weakness is potentially coming,” Siddarth Chand Lall, a fund manager at Canaccord, said. “We don’t know when as of yet. Would you add more now as an international buyer of equities, funds, or bonds in the US? Maybe not; you might hold back.

“Does that necessarily mean you buy UK small mid-cap companies? I would say it might make a case for not selling them any more, and even that first step is a good start.”

Mr Trump’s views on his war with Iran appear to change hour by hour, leading to wild swings in oil prices, but also accentuating concerns about policy instability in the US.

Concerns about Iran have only added to existing fears about Mr Trump, following his quickly abandoned tariff announcement on Liberation Day last year. Investors have separate concerns about a potential artificial intelligence bubble on Wall Street.

Investors are increasingly reluctant to hold US stocks, according to a recent Bank of America survey of fund managers. However, the same survey also found reluctance to hold UK stocks.

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