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MoneyWeek article - Are UK stocks still attractive and where to invest

Journalist: Marc Shoffman, Freelance

ended 05. December 2023

Data from the ONS shows an increase in overseas investment in UK shares but the proportion of Brits backing companies from these shores has dropped.

I am writing an article looking at this trend and am keen on:

Why are Brits less interested in UK shares? 

What shares would you recommend for investors keen on backing the UK?

Kind regards

Marc

5 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
With an attractive dividend yield, a diversified geographical business base and potential for growth in 2024, the UK looks like a great place to grow your wealth.

A Labour government looks more and more like a sure thing, so I would recommend backing the green energy sector. This has been neglected under the Tories since Sunak to the helm and valuations in the sector a majorly depressed. Starmer will be a major boost for wind and solar power providers and all associated industries.
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Scott Gallacher
Director at Rowley Turton
Brexit uncertainties and the traditional 'value' bias of the UK stock market may have driven investors, both in the UK and overseas, to seek better returns elsewhere. Yet, prematurely overlooking the UK stock market may be a missed opportunity. Despite past disappointments, UK shares may present a potential key to seizing overlooked opportunities. Don't let history overshadow the value emerging in the UK market – it could be your gateway to future success."
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Philip Dragoumis
Director and Owner at Thera Wealth Management
It looks like British investors are becoming more and more rational and have taken good advice. They are embracing market pricing, global capitalism and diversification. Investing for patriotic reasons makes little financial sense. The UK is less than 4% of the global equity market. If there are opportunities in UK companies and UK shares, then global capital will eventually find its way to them.
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Adam Pickett
Independent Financial Adviser at McLaren Capital
The difference in interest from external investors and internal ones is likely that of sentiment.

Overseas investors look to Britain and see a nation that is avoiding extremism and is growing faster than its neighbours. They also see a stock market that is well-valued and paying good dividends. In other words, they're taking an objective view.

Conversely, Brits have a very different picture. We have a government that is deeply unpopular and will be in power for another year, and we are feeling pressure on our budgets and in our hospitals. These are things that are being felt across the world, but we don't see it, and lead us to be deeply pessimistic about our country's future.

Combine this with the outperformance of US stock markets over the last 20 years (most investors chase past performance, however counterintuitive!) and the increasingly easy access to it, and you start getting a picture of why Brits are looking overseas while foreign capital is picking up.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
Yes UK shares are still attractive. The UK stock market is only a small percentage of global stock markets, and as more people are investing in global tracker funds, the proportion allocated to the UK therefore is less.