UK stocks prepare for a "Boris bounce"

published 29 November 2019

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".

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".

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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.