Since June 2016 the uncertainty surrounding Brexit has weakened the pound and turned the UK stock market into an uncertain place for investors. Over this period the FTSE 100 index has lagged the MSCI World index by 2.1% a year and experienced around 10% more volatility.
The UK stock market is “on sale” and could enjoy a bounce if the Conservative Party win a majority at the upcoming general election, argues Mark Slater, manager of the Slater Income, Slater Growth and Slater Recovery funds.
For the past three years, readers of the financial press will have heard countless times that the UK stock market is ‘cheap’. Investors fearing the worst outcome from Brexit, as well as the potential of a Labour government coming to power, have turned their backs on UK shares, pushing the market to supposedly attractive valuations for the more contrarian-minded. This is certainly the view of Richard Staveley, a fund manager at Gresham House Strategies.
Many football fans of a certain age will remember the ‘knee-trembling’ experience of heading down to the Old Den, Millwall’s former football ground. My first experience there was shortly before they closed it down to move to the slightly less terrifying New Den to watch my team, Watford, suffer a characteristic hammering in February 1993. Walking up the suitably named Cold Blow Lane to the away end, and hearing the famous “No one likes us, we don’t care” from the Millwall faithful, will last long in the memory. The football was less memorable.
There is intense debate among our asset allocation panellists and the teams who support them, about the dangers of a global recession next year. Schroders’ Keith Wade has likened the world economy to a wobbly bike where growth momentum has become so weak that any bump in the road could topple it – if not next year, then in 2021.
Between the end of May and the start of October, our long-term growth fund portfolio returned a respectable 5.5%. “That performance is reasonably pleasing,” says the portfolio’s manager, Mike Deverell at Equilibrium. “Most things in there made some money. Of course, some didn’t, and unsurprisingly those were UK assets. But everything else went up.”
Last Thursday’s announcement that the prime ministers of the UK and Ireland had found a potential “pathway” to a Brexit deal was a big surprise.
Despite mounting uncertainty surround Brexit, Britain is on track to avoid a recession in 2019, according to the latest figures from the Office of National Statistics (ONS).
Both sterling and the UK stockmarket could be in for steeper declines should the UK opt to leave the European Union without a deal, according to a “stress test” study by the MSCI, the index provider.
Optimism is hard to find in investment circles at present, but as the late Sir John Templeton famously said: “The time of maximum pessimism is the best time to buy”. That brings us to the UK, which has for a couple of years now been among the most loathed of regions, by both domestic and international investors.