Britain is in the bargain basement

Our stockmarket has been an international pariah this year – all the more reason to snap up some deals.


Our stockmarket has been an international pariah this year and the exodus is gathering pace, says Daniel Grote on Citywire. The latest monthly Bank of America Merrill Lynch survey of global fund managers revealed their allocation to UK stocks had fallen to a near-record low. British investors are just as negative.

An index of UK investor confidence by Hargreaves Lansdown suggests their mood is worse than during the financial crisis. According to the Investment Association, £10bn has been yanked out of UK equity funds since the referendum in 2016, while £12.8bn has been located to bond funds in the same time frame. "That's a risk-off trade if there ever was one," says Investor Chronicle's Mark Robinson. But the gloom is starting to look overdone. Brexit is the key near-term problem, but the shape of our future relationship with the EU will be much clearer by the spring, so investors put off by the uncertainty should then be inclined to take another look at the UK market, as Alex Wright of the Fidelity Special Values Trust notes in the Investors Chronicle.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Meanwhile, a harmful no-deal Brexit is still not widely thought likely, but in any case, valuations have reached the point where plenty of bad news is already in the price. The FTSE 100 offers a forward dividend yield of 4.9%, says Hamish McRae in the Evening Standard. The yield has very rarely been above 4% in the past 30 years. And the fundamentals are solid, with the labour market bolstering wages, which bodes well for consumption, and UK corporate profits (the mid-caps and blue-chips combined) reaching an all-time high in the year to November, according to the Share Centre. The upshot? Next year could well be a much better one for UK shares than 2018.




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Stock markets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Stock markets

There are lots of reasons to be bearish – but you should stick with the bulls

There are plenty of reasons to be gloomy about the stockmarkets. But the trend remains up, says Dominic Frisby. And you don’t want to bet against the …
17 Jul 2019

Most Popular


Here’s why the Federal Reserve might print more money before 2020 is out

The Federal Reserve wants to allow US inflation to run “hot” for a while. But that’s just an excuse to keep interest rates low – and possibly print mo…
10 Feb 2020
House prices

Is the jump in house prices just a Brexit bounce, or is it more durable?

UK house prices rose sharply in January. Some of that is down to the end of Brexit uncertainty – but not all. There is a real risk that prices will ke…
7 Feb 2020

Winners and losers from a hard Brexit

Our exit from the EU is likely to be of the hard variety, says Matthew Lynn. Investors should back the industries that will flourish
9 Feb 2020

Is 2020 the year for European small-cap stocks?

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, on why he believes European small-cap stocks are performing well.
28 Jan 2019