Five reasons the UK stock market will rise in 2011

WHY THE UK MARKET WILL RISE IN 2011

F&C's Ted Scott reveals why he thinks the UK stock market will have a good year.

VALUATION Despite the strong rise in equities since the start of the current bull market, valuations are not stretched. Last year, the equities delivered a total return of 14.5% but the PE ratio for the market fell because earnings rose more than share prices. The consensus for earnings growth in 2011 is about 20% which, if achieved, leaves the market on a modest PE of 11 xs. This is supported by a reasonable dividend yield of about 3% that is attractive in a low return environment.   STRONG CORPORATE BALANCE SHEETS Unlike the private sector and governments, companies are not h...