A Tale of Two ‘Cities’

For UK Stock Markets, it might appear to be the best of times and the worst.

Key Points:

· The UK stock market appears to have stirred into life at the exact moment when its obituary was being written. There’s a bizarre juxtaposition at play – with stories of IPO’s drying up, listings fleeing to the US, our best and brightest companies being bought up or bid for, just as the index was hitting all-time highs.

· As one recent LinkedIn post highlighted - “BREAKING NEWS! ££ Billions wiped off UK stock market value. Investors left nursing huge gains, despite negative news media.”

· Of course, by way of context, it all depends on where in the UK market you have been invested. Since the FTSE 250 peaked in Sept 2021, the experience for large cap and mid cap investors has been quite different.  The chart provides a visual of this dynamic. 

· While the FTSE 100 has benefitted from recent strength in the banking sector (better results, share buy backs) and oils & mining (rising commodity prices), the FTSE 250 – where mid and small cap stocks tend to be more domestically focused and often less liquid (in terms of trading volumes) – has not received the same attention from asset allocators when they have increased their UK exposure/weightings.

· So, the benefits of investing in the UK has become more an outcome of ‘where’ you have allocated your funds. For now, FTSE all-share and equity income strategies having been proving to be more successful than FTSE250 ones.