Bargain UK stockmarkets set for a boom in mergers and acquisitions

The FTSE 100 has enjoyed its best month in 31 years. Britain’s blue-chip index gained 12.4% in November, adding more than £180bn to its market value. You would have to go back to January 1989 to find a more profitable month for UK investors.

Despite the gains, the FTSE 100 remains down 16% so far this year. The UK market “has been a dog” ever since the 2016 Brexit vote, says Russ Mould for AJ Bell. But as any investor knows, the aim of the game is to “buy low” and sell high. Bargain-hunters sense opportunity. There have been 14 takeover deals in the past month alone. To quote the writer Joseph Campbell, “the cave you fear to enter holds the treasure you seek”.

Private-equity firms have accumulated a global war chest estimated at $2.5trn, says Ben Martin in The Times. Recent bids for the AA and McCarthy & Stone show they are ready to spend in London. Data from Peel Hunt shows that there have been £22.8bn-worth of bids for London-listed firms since the start of August, never mind the awkwardness of negotiating a multimillion-pound acquisition over Zoom.

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There could be more to come. Some potential buyers are reportedly holding back while London and Brussels hash out a deal. When there is more clarity on that point, they stand ready to swoop.

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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.