International Investors Continue To Shun UK Equities
We’ve spoken before about the discounted bargain the current valuations of London-listed equities currently look like they represent.
Many London Stock Exchange-listed companies, especially the larger FTSE 100 constituents, don’t even derive a majority, or even a particularly large minority, of their revenues from the domestic market. But despite looking like a bargain, international institutional investors are still not being tempted back. Are they missing a trick or are global institutional investors seeing risks that those of us investing online in British equities should perhaps be
UK equities are certainly cheap compared to U.S.
However, with little to no progress around post-Brexit clarity in the 2 years since the decision to leave the EU was taken, international investors believe the lack of certainty equates to a risk that the valuation ratio is not attractive enough to compensate for. Investors are, if anything, more concerned now than they were a year or two ago, seeing a series of extensions to Brexit as the most likely scenario, with growth continuing to suffer as a result.
It hasn’t, however, all been one-way traffic of international investment capital leaving the UK. Investment data group EPFR Global figures show heavy outflows over the second half of 2018 turned positive in February. The presumption is that value investors returned to UK equities, encouraged by attractive valuations. But on the whole, investors see no reason to take a risk on Britain under current conditions. The pan-European benchmark, the Euro Stoxx 600 also offers a price/book ratio of, like the FTSE 100, x1
International fund managers do expect the UK to bounce back once Brexit uncertainty is removed. But most plan to allocate capital at that point, seeing little reason to expose themselves ahead of any decision. But while investor sentiment
For those investing online for the long term, one thing to keep in mind is that institutional investors have a shorter term outlook than it is necessary for anyone investing with a 10 or 20-year horizon. If funds see two or three consecutive years of poor
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