Nézze és figyelje
60 seconds on the most attractive sectors in the UK
Alex Breese explains why financials and commodities are among the sectors that look attractive for UK equity investors.
17. 10. 2017
Unstructured Learning Time
Survey data shows that asset allocators are underweight UK equities, primarily because of the risks that Brexit poses to the economy, as well as the unstable political backdrop.
However, it is worth reminding investors that only one-third of the UK stockmarket is exposed to the UK economy.
Domestic valuations reflect risks
Although we remain cautious on the outlook for the UK economy, we are starting to find some domestic opportunities emerge.
We note that a lot of this negative sentiment and uncertainty is reflected in sterling weakness, in GDP forecasts, in relative earnings revisions, and crucially in low valuations.
Opportunities in financials and commodities
Outside the domestic part of the market, we’re finding opportunities in sectors like financials and commodities.
Here we see a combination of low expectations, cheap valuations and fundamentals that are generally improving.
Cautious on consumer staples
Conversely, we are far more cautious on the outlook for the consumer staples sector, where we see high expectations, expensive valuations and fundamentals deteriorating as organic sales growth declines.
We are also seeing increasing levels of debt as management teams pursue risky merger and acquisition strategies.