Having returned from a sunny break in Provence, I find that stock markets are barely changed and continue to embrace a goldilocks view of ongoing economic data, particularly in the US. So as not to ruin my holiday mood, I’ve been looking for good news stories and one in particular caught my eye. According to investment house Schroders, it seems to have been confirmed that the UK market is back in fashion, with US investors adding more than $15bn since the beginning of the year, a figure above that of any other overseas market.
Often seen as a safe haven in the face of political and economic turbulence, relatively cheap valuations have finally started to catch the eye and this should come as welcome news to the LSE which as readers will know, has struggled to attract new listings in recent years.
As Simon French at Panmure Liberum put it, perhaps this increasing attractiveness is no surprise considering some of the problems other countries have: the French can’t pass a budget, the German economy has grown even slower than the UK, Canada is in the cross-hairs of the US trade war, and Japan has debt twice the size of the UK’s! There was also good news from the UK economy, with second quarter GDP rising by 0.3%. Better than forecast but a slowdown from the 0.7% rise seen in the first quarter.
Over the coming weeks investors will also be mindful of any possible peace dividend leading from a ceasefire between Ukraine and Russia should one materialise. The market odds on this happening have risen sharply since the Alaska summit was announced and a resolution would likely act as a tailwind for European equities, but to this writer, there seems an awfully long way to go yet.
The value of securities and the income from them can fall as well as rise. Past performance should not be seen as an indicator of future returns. All views expressed are those of the author and should not be considered a recommendation or solicitation to buy or sell any products or securities.
