"Germany’s biggest bank” has become the latest to trumpet the appeal of UK stocks, says John-Paul Ford Rojas in This is Money. Deutsche Bank notes that the FTSE 100 has put in a “remarkable performance” of late, with the blue-chip index outperforming the eurozone’s Stoxx 50 by 10% since the beginning of April. The London market has endured a “grim period”, with “bombed-out valuations” prompting big names to flee to foreign exchanges.
But at a time of political uncertainty in the US, France and Germany, Britain boasts newfound safe-haven appeal. The UK has become Wall Street’s favourite European market, says Eleanor Butler for Euronews. A net 30% of global fund managers told a Bank of America survey they plan to take “overweight” positions in UK equities, up from “less than 10%” in July. Swiss equities are in second place, with Germany Europe’s least popular market.
Should you invest in UK stocks?
Things aren’t all going Britain’s way, say Harry Dempsey and Nic Fildes in the Financial Times. The City has long prided itself on being the “natural listing venue” for commodity firms. Yet the market capitalisation of London-listed mining shares has fallen from $322 billion in 2018 to $272 billion today. That puts the capital behind “New York, Toronto and Sydney” as a global mining hub.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
London has suffered from the de-listing of Russian gold miners in 2022 and BHP’s decision to shift its primary listing to Australia. Meanwhile, Chinese firms increasingly dominate mining activity in Africa. Average daily-traded volume on the FTSE All-Share index has dropped from a peak of nearly £14 billion 2007 to about £3.6 billion as of last month, says Bloomberg. Still, London remains Europe’s busiest bourse measured by daily trading. Globally it is the world’s sixth-biggest exchange by market capitalisation.
After a long listings drought, several big names, including fast fashion retailer Shein and Anglo American Platinum, are eyeing potential London listings. An upcoming rush of flotations might finally put some wind in the UK market’s sails. UK shares trade on “little more than half” the rating for US firms on an earnings basis, says Tom Stevenson in The Telegraph. Lowly ratings are often justified. US businesses are typically better run than UK firms – some “stodgy FTSE 100” firms are mediocre stewards of capital.
But for those prepared to “dig” into mid caps there are plenty of compelling UK value opportunities. Goldman Sachs forecasts that the FTSE 100’s earnings will grow 9% next year, compared with 20% for the FTSE 250 mid-cap index, but both indices trade on comparable valuations. With interest rates falling and the British economy perking up, the FTSE 250 looks like a “coiled spring”, says Alexandra Jackson of the Rathbone UK Opportunities Fund.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
Hargreaves Lansdown slashes fees for ISA and SIPP investors - how does it compare to other providers?Hargreaves Lansdown, the UK’s biggest investment platform, has dropped its fees by 40%, to their lowest ever level, for certain customers. Is it a good deal, and how does it compare to other providers?
-
BP's 'long, painful decline' – and why next year could be even tougherOpinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
-
BP's 'long, painful decline' – and why next year could be even tougher
Opinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global marketsOpinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
-
Falling revenues and mounting debt spell trouble for Jumia TechnologiesStruggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
-
Bargain Britain boasts both value and momentumInterview Ian Lance, manager of the Temple Bar Investment Trust, tells Andrew Van Sickle that the outlook for UK stocks has improved and healthy long-term returns are in prospect
-
Next reports £1 billion in annual profits for the first time – what's next for the retailer?Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
-
Best of British bargains: cash in on undervalued companies in the UK stock marketOpinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
-
Building firm Keller presents low debt and ample scope for growthGeotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
-
PZ Cussons share price down 75% in last decade – why it's one to watchOpinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
