Making the UK 'investable' again: Domestic equities now due a re-rating

Deep Dive into UK equities

UK equities are now valued at a greater discount than at the depths of the Global Financial Crisis (GFC). We believe this is overdone and expect a re-rating.

During the first 15 years of this century, the FTSE 100 index's total return managed to outpace the MSCI World (see Figure 1, below). However, this trend has reversed dramatically since 2015.  This has left UK equities valued like emerging markets. Only Latin America is on a lower 2021 price earnings (P/E) multiple than the UK. The UK's P/E is 14.5x for 2021, a 26% discount to the global equity market, the largest discount in the past two decades and even worse than in thte throes of the GFC in September 2008. UK equity fund outflows hit record £1.2bn between June and August on no...