Are recent falls for UK indices excessive given recovery momentum?

UK indices have been caught in the eye of the storm and are down more than 8% since the start of the year at the time of writing.

While acknowledging threats to UK sentiment in the form of Brexit and a possible housing market bubble, we expect this period of extreme weakness to be relatively short lived. Using the US as a benchmark, the UK is, generally speaking, a more open economy. However, almost half of total UK exports are to the eurozone, with less than a quarter of exports going to China and other emerging markets. In contrast, close to 50% of US exports are to emerging markets, leaving it more exposed to volatility in these markets. We believe the UK's eurozone exposure will turn into a tailwind, having ...