F&C's Lees believes UK large caps will not be hurt by Spending Review

F&C's head of UK equities Peter Lees is urging investors not to sell their UK holdings if this week's Government Spending Review is more negative than expected, as he says UK stocks are "not a UK story".

Lees said UK stocks are unlikely to be heavily impacted by savage UK Government cuts, as the majority of large caps are international companies. Some 70% of the earnings of listed UK companies, and about 80% of those in Lees’ £131m UK Equity fund, derive from outside the UK. Investors should continue to hold UK stocks on valuation grounds as well, Lees said. UK companies are on valuations “that would make emerging market company fund managers weep,” he added. “The free cash flow yield of UK Plc is 7%, which is the highest it has been for 25 years. UK Plc is fantastically st...