Reasons behind investors" caution

With the MSCI World Index rising 44.1% from the low point of 12 March this year to 16 October, the UK FTSE All Share has lagged with returns of 38.2%, all in sterling terms (source: Datastream, 17/10/2003). Why such timidity? Is this caution by predominantly UK investors based on a dispassionate assessment of the UK"s relative merits, or does it reflect an unjustified risk aversion that may correct itself in the near future? The answer may lie on two levels. The first concerns investors" perception of the UK"s relative economic health, seen from both home and abroad. The second concerns th...