Points of View: UK Market Review


Thursday 5 July 2018



This week NW Brown take a look back over the period since 1 January and consider the relative attractions of the UK market.

Stock markets suffered their first meaningful fall for nearly two years at the start of the year. Having hit a peak of approximately 7,800 in January, the FTSE 100 fell nearly 12 per cent to a 12-month low of just under 6,900 in late March. Since then, stock markets have promptly recovered and again sit close to all-time highs.

Despite this, the UK stock market is stubbornly out-of-favour with global investors thanks to the political uncertainties of Brexit and the threat of a left-wing government coming into power with a mandate to hike taxes and nationalise large parts of the economy. Indeed, global investors have clearly taken a consensus underweight position on the FTSE, which is arguably at its most unloved point in decades relative to other developed stock markets.

On the one hand this is frustrating for UK investors, but on the other hand it is re-assuring; looking forward, it seems to us that the UK stock market offers very attractive relative value for long-term investors. The FTSE 100, for example, currently yields approximately 3.8 per cent; in contrast, the yield offered by the S&P is 500 is a miserly 1.9 per cent. Moreover, it is important to remember that the UK economy is not the same as the UK stock market. There is some overlap, but it is far less deep than most people assume. The domestic macroeconomics of the UK has very little to do with the collection of international businesses the make up the UK stock market. To this extent, the UK stock market provides a natural hedge against any woes that befall the UK economy.




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January 7 2019 / 5.00-7.00pm
Informal Networking Evening Huntingdon
January 14 2019 / 5.00-7.00pm
Informal Networking Evening Ely
January 16 2019 / 5.00-7.00pm
Informal Networking Evening Peterborough
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