At around 11x times forward earnings, UK equities are the cheapest they’ve been since the 2008 financial crisis apart from COVID, and they are the cheapest in the developed world. Even relative to their own history, UK equities are trading at 20% discount, vs the US at a 15% premium.
While the rest of the developed world is seeing inflation rapidly fall, goods inflation has remained stickier in the UK, leading the market to assume that the Bank of England will have to remain relatively tight. This is weighing on sentiment and equity valuations.
So, is the UK economy structurally different from the rest of the developed world or can inflation fall faster than the market expects? And can a shift in inflation expectations be the positive catalyst to take UK equities higher?
In this podcast episode, Alison Savas and James Rodda discuss the UK’s macro environment and market outlook, along with Antipodes’ three largest UK-listed holdings; Diageo, Tesco, and NatWest.
- Inflation in the UK & macro outlook: 1:30
- Diageo (LON: DGE): 6:30
- Tesco (LON: TSCO): 13:40
- NatWest Group (LON: NWG): 21:20
*Stock commentary in this episode is illustrative only and should not be considered as recommendations to buy, hold, or sell any security.
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