The UK equity and bond markets are looking favourable relative to other regions due to overall posit...
The UK equity and bond markets are looking favourable relative to other regions due to overall positive fundamentals in the market.
This is the view of Richard Peirson, fund manager at Framlington, who says the UK market is cheaper than it has been for a long time. He emphasises the bond market, in particular, is looking attractively priced at the moment.
As far as the US and UK are concerned, now is a buying opportunity, Peirson says. The interest rate environment in both countries is positive and rates are close to a peak around the world.
Opec says it will increase production if the oil price does not fall and institutional liquidity is high, he adds.
Peirson says: "Therefore, the market is reasonably underpinned from a mid-term view. The UK looks good value internationally, especially its bond prices.
"However, one must still bear in mind these global issues when investing in the UK.
"The UK does not have as many high quality technology companies as the US, but it does have many good quality companies in other sectors, such as HSBC, Reuters, the spirits company Diageo and Cable & Wireless, which is setting up an internet platform."
Peirson says Framlington has not added significantly to its UK weightings recently.
It has, however, moved to a more defensive position in its UK portfolio, reducing its more extreme positions at a sector and stock level, which it was holding earlier this year.
Peirson says Framlington has made this move because all markets are less certain at present. The group has reduced its previously highly overweight position in the technology, media and telecom sectors, and bought into financials.
Tim Rees, who works on the asset allocation team at Clerical Medical and is director of UK equities, says he is mildly positive on UK equities.
He adds: "There is little momentum pushing equities towards the bottom of the trading range. The UK market is reasonably supported by its fundamentals."
Rees' outlook on the UK market is relaxed as he believes it is coping well with global concerns.
He says: "Within the UK market, there is a change process going on. The momentum and leadership of the technology sector has given way and defensive sectors are coming through, which have shown very good earnings growth this year."
Rees says there are plenty of sectors in the UK that are on low ratings, such as construction and chemicals.
Bob Yerbury, chief investment officer at Perpetual, says his view on the UK market is generally positive: "It is more benign than other markets at present as interest rates appear to be steady, the economy is slowing a bit and inflation levels are not problematic," he says.
"As the technology and telecom boom of late last year and early this year has unwound, it has highlighted the attractiveness of other areas. The UK economy is growing, earnings estimates are looking good and corporate activity is positive."
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