UK stocks prepare for a "Boris bounce"

UK stocks could be in line for a bounce if the election result reduces political uncertainty.

Jeremy Corbyn is still scaring investors, says Kate Palmer in The Sunday Times. "Billions of pounds have been pulled out of UK equity funds" in recent months as "investors panic" over a possible Labour government. Calm down, says Tom Stevenson in The Daily Telegraph. Currency, bond and equity markets barely moved on Labour's publication of its hard-left manifesto last week. So"either the City is pinker than it seems" or, more plausibly, it thinks there is little chance of him becoming the next prime minister. "The markets are telling us to relax."

UK stocks have been trading at an average 20% "political risk" discount compared to other markets ever since the 2016 referendum, says Tineke Frikkee in the Financial Times, but we could be in line for a bounce if the election reduces political uncertainty. Foreign buyers have already noticed that UK valuations are attractive. "Since mid-July, there has been roughly one bid for a UK-listed company every other week." Now "might be the moment to buy British".

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

There is "plenty of scope for upside" after 12 December, agrees Jeremy Warner in The Daily Telegraph. A majority for Boris Johnson would lift the Labour threat and "some of the pent-up consumer and investment demand held in check by the Brexit paralysis would come flowing back". Stocks would then "enjoy a rally based not just on sentiment but real economy prospects".

Advertisement

Recommended

Visit/517688/the-british-equity-market-is-shrinking
Stockmarkets

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
Visit/516758/beyond-the-brexit-talk-the-british-economy-isnt-doing-too-badly
Economy

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
Visit/511212/reasons-for-investors-to-be-bearish-but-stick-with-the-stockmarket-bulls
Stockmarkets

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
Visit/510684/good-news-on-jobs-scares-stockmarkets
Economy

Good news on jobs scares US stockmarkets

June brought the best monthly US jobs growth of the year, but stockmarkets were not best pleased.
11 Jul 2019

Most Popular

Visit/investments/property/601065/what-does-the-coronavirus-crisis-mean-for-uk-house-prices
Property

What does the coronavirus crisis mean for UK house prices?

With the whole country in lockdown, the UK property market is closed for business. John Stepek looks at what that means for UK house prices, housebuil…
27 Mar 2020
Visit/personal-finance/mortgages/601045/coronavirus-what-it-means-for-your-mortgage-or-your-rent
Mortgages

Coronavirus: what it means for your mortgage or your rent

Ruth Jackson-Kirby looks at all the key questions for owners, renters and landlords affected by the coronavirus crisis.
29 Mar 2020
Visit/economy/uk-economy/601063/the-uks-bailout-of-the-self-employed-comes-with-a-hidden-catch
UK Economy

The UK’s bailout of the self employed comes with a hidden catch

The chancellor’s £6.5bn bailout of the self employed is welcome. But it has hidden benefits for the taxman, says Merryn Somerset Webb.
27 Mar 2020
Visit/investments/commodities/energy/oil/601069/oil-prices-have-collapsed-and-some-argue-that-they-could
Oil

Oil prices have collapsed – and some argue that they could even turn negative

With an excess of supply and a drastic cut in demand, the oil price has been hammered this year. John Stepek looks at what that means for oil produce…
30 Mar 2020