Is the British stock market back?

For this article on the British stock market in Russian click here

The dynamics of the British stock market began to fall behind the other markets after the Brexit decision 2016. The negotiations in regard of a possible deal were arduous and uncertain which made investors cautious. At some point in time, investments in the UK even became uninteresting because of the systematic bad news. It seemed that the whole world started to ignore the British market a little bit.

But, everything changes and the conclusion of a deal on Brexit may have a positive impact on the prospects for this market.

Why can British stocks be attractive again?

First of all, uncertainty about the UK’s economic prospects have significantly decreased with the settlement of Brexit. Now investors can consider this market as less risky, and therefore evaluate it higher.

Secondly, the British stock market has fallen far behind other markets since the Brexit referendum in 2016.

Thirdly, among the stocks that make up the British FTSE 100 index there are many value companies. They are the representatives of the traditional sectors, which suffered because of the Corona restrictions this year. So, around 40% of the index are the companies from the commodity, energy and financial sectors. They can become the main beneficiaries once the rate of vaccination increases and the economic recovery that follows. This is likely to have a positive impact on their stocks. We have already mentioned inflation and the positive impact it can have on the resource sector of the market.

Based on the factors mentioned above, we are more optimistic about the British stock market and recommend our investors to redirect some of their investments to this sector.

You can take some individual shares, but, as we’ve mentioned earlier, we do not support individual shares and recommend that you focus your attention on collective investments in the form of ETFs.

The best option

The best option for a generic investor, in our opinion, is the iShares Core FTSE 100 UCITS ETF, which follows the index of the 100 largest public companies (FTSE 100). It is traded on the LSE (London Stock Exchange) in GBP (British pounds). It pays a quarterly dividend.

There are some other ETFs that trade in dollars and euros. But, it is more rational to invest in GBP in Britain as the recovery of the British market can also strengthen the pound.

If you are interested in this opinion, please contact your consultant. If you are not our client yet, please contact us and our consultant will contact you in order to arrange a meeting at the time and place most convenient to you.