The 'intriguing value case' for UK equities

Investors discounting fears of slowdown

The entrenched pessimism towards UK equities has created an intriguing value case. The dividend yield in particular hovers at about 4%, a threshold which traditionally indicates healthy performance going forward.

Moreover, the UK's average yield is now some 1.5x that of other developed markets.   Other measures also point to undemanding valuations. The UK's 12-month forward P/E ratio relative to the MSCI World Index's P/E is in line with its 15-year average. The free cashflow yields for many sectors, including resources, technology, retail and pharma, are above 6%.  "It's not all doom and gloom": Paul Mumford on the case for UK domestics in the face of rising rates These relatively low valuation levels suggest investors have, at least partly, been discounting fears of an economic slowdow...