Friday 24 September 2021 9:17 am

Exclusive: Fund managers say UK equities are still undervalued despite Brexit and Covid bounce back

Nearly nine in ten professional investors from the UK, US and Germany believe UK equities are undervalued, according to new research shared exclusively with City A.M. this morning.

The investors, who collectively manage over $300bn, said in a MBH survey that one of the key reasons for optimism around UK equities is that the country has one of the best Covid-19 vaccination programmes in the world, and this is contributing to a faster recovery and greater economic growth than many other developed countries.

Over the next 12 months, 47 per cent of the professional investors interviewed said they will increase their allocation to UK equities compared to just 5 per cent who expect to reduce it

The corresponding figures for three years are 56 per cent and 11 per cent, respectively.

Around 20 per cent of the professional investors interviewed expect to increase their allocation to UK microcaps between now and 2023, compared to 8 per cent who will reduce their exposure. 

The corresponding figures for small caps are 33 per cent and 10 per cent respectively.

“UK equities took a hit after Brexit, and along with stock markets in general, they suffered during the early stages of the Coronavirus crisis,” explained Callum Laing, CEO of MBH Corporation.

“However, they have bounced back but our research shows that many professional investors still believe they are undervalued, and they are looking to increase their allocation here,” Laing told City A.M. this morning.