We asked Jeremy Simmons from Slater Investments, who have been investing in the UK equity market since 1994, and here’s what he had to say.
- The UK’s relative developed country stock market valuation is at a historic low. This means you can purchase companies on the UK stock market for much lower prices than equivalent companies in other developed country stock markets.
- Private equity investors are valuing UK-based private firms much higher than their publicly listed counterparts, creating a valuation gap between public equity (shares listed on the UK’s public stock market) and private equity (UK firms privately owned by specialised investment funds).
- There has been significant interest from overseas buyers looking to take over UK companies listed on the UK stock market, indicating they are taking note of the value the UK stock market has to offer.
- UK company management teams are generally more positive than market commentators. Many UK firms have been performing well, offering unique and important services, which may contribute to their attractiveness as investment opportunities.
- The recent government election in the UK has provided more confidence for long-term investments in the UK stock market, which was previously lacking. This may attract more investment into the market and potentially increase share prices.
- There is also support from multiple political parties for promoting the UK stock market, which could further enhance its appeal.
- In addition, inflation in the UK has largely been tamed, and we have already seen our first interest rate cut (from 5.25% to 5% on Thursday 1st August 2024). Lowering interest rates means investors look to alternatives (e.g., the stock market) to generate investment returns. Lowering interest rates may also improve overall investor sentiment, as lower interest rates mean many businesses can borrow and invest more.
- Currently, many investors have an extremely low allocation to UK equity; in fact, these are at historic lows. The increasing consensus is that this will change, driving more buyers into the UK equity market and resulting in higher share prices. That’s why now is the best time to invest in UK equity.
To find out more about investing in UK equity, click here to chat with one of our team.
The content of this article is aimed at retail consumers. It is for general information purposes only and does not constitute investment advice, as it does not contain all the information an investor may require to make an investment decision. Please obtain professional advice before entering into any new arrangement.
