UK emerges as haven from global storms

Some bankers expect a revival for UK stock markets shrivelled by relentless selling during years of turbulence under successive Conservative governments. — Reuters

INVESTORS are looking at UK markets as a potential haven as political uncertainty rises in the United States and elsewhere in Europe, in what could mark a stunning turnaround for a country that appeared to have lost its traditional appeal to global capital.

A landslide election victory for Britain’s centre-left Labour government last week offers the prospect of predictable policy and improved trade with the European Union to reboot an economy that has struggled since the 2016 Brexit vote.

Meanwhile, parliamentary gridlock in debt-laden France has stirred memories of previous eurozone crises, and investors are scrambling to guess what former US president Donald Trump regaining the White House might mean for markets.

Britain’s economy is picking up, and some bankers expect a revival for UK stock markets shrivelled by relentless selling during years of turbulence under successive Conservative governments.

BlackRock Investment Institute, a research arm of the world’s largest asset manager, said on Tuesday it was bullish on UK stocks, potentially heralding a mood shift among major global institutions that have cooled on Britain since 2016.

But even those moving funds into the UK warned that its haven appeal may be short lived unless new Prime Minister Keir Starmer pulls off a bold plan to boost living standards without straining the nation’s stressed finances further.

“The (UK) election improves things at the margin and the uncertainty on Europe driven by France means there could be a honeymoon period for Britain for a bit,” said Pictet Wealth Management chief investment officer Cesar Perez Ruiz.

“The market is going to be asking for more detail on fiscal spending and (Starmer) hasn’t given us a lot of information.”

Perez Ruiz said he sold some European corporate debt because of French political risk and bought UK equivalents instead, but may not hold the position beyond six months.

Investors have kept pulling money out of UK equity funds and stock market trackers since the July 4 election, daily data from information provider Lipper showed. — Reuters