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".



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

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


Currency Corner: how high can the pound go against the euro in 2020?

In the month in which we should finally leave the European Union, Dominic Frisby takes a look at the pound vs the euro and asks just how high sterling…
13 Jan 2020

Money Minute Wednesday 15 January: UK inflation and house prices

In today’s Money Minute, we look ahead to the latest UK inflation and house price figures, plus we have Germany’s GDP data for 2019.
15 Jan 2020

Money Minute Thursday 16 January: a batch of company results

Today's Money Minute looks ahead to results from a host of UK companies, plus the latest unemployment figures from the US.
15 Jan 2020

Money Minute Friday 17 January: UK weakness likely to continue

Today's Money Minute previews UK retail sales figures the UK, inflation data from Europe and industrial production from the US.
17 Jan 2020