UK market trading at compelling valuation

UK INCOME

Sovereign debt problems in Europe have halted the equity rally and raised questions about the strength of the global economy.

UK equity income investing has been further challenged by the largest dividend payer, BP, suspending its dividend for this year. More positively, the UK market is now trading at a compelling valuation both relative to historical norms and other developed markets. Furthermore, with earnings stability restored, dividend-paying ability has been enhanced, further supported in the UK strong corporates balance sheets and diverse geographic revenue streams. The median net debt/EBITDA for UK companies is the lowest in Europe bar Switzerland and the Nordics, giving further evidence of the r...