JP Morgan: Record-breakingly low British stocks are a historic buying opportunity

JP Morgan said that investors have been given a huge buying opportunity following the collapse of British stocks to “near-record cheap” levels after years of turmoil over Brexit and Covid.

According to an investment bank, UK shares are selling at bargain prices after a period of significant underperformance.

Analysts at JP Morgan stated that the British market will be more resilient than its counterparts as the global rally of 18 months slows down.

Mislav Matejka is the bank’s chief equity strategy. He stated: “While we are bullish about the direction of the global equity markets, it goes without saying, that a large chunk of the up-move already materialised.

“UK equity could be more resilient against a global equity backdrop which doesn’t show as dramatic upward-moves than seen before.”

London has been trailing behind other stock markets since 2016’s Brexit vote. Shares have been held back by fears about the country’s exit from the European Union, and a shortage of tech stocks that are fast-growing and driving US growth.

UK-listed companies are now 50pc behind US peers over the past five years and 24pc ahead of European equities, even after removing industries like energy and banking which make up a larger part of the British index.

Analysts also changed preference from the FTSE 250 mid-cap to the FTSE 100 blue-chip, stating that the top index’s high percentage of exporters would make it more profitable.

The London Stock Exchange index of the largest listed companies is still reeling from the severe losses it suffered in spring 2020 when pandemic fears flooded markets.

Mr Matejka and his team predicted the FTSE 100 would be given an extra tailwind by a weakening of sterling, which tends to boost the internationally-focused index’s members.

They predicted that UK stocks would be able to withstand any increase in interest rates. The Bank of England is widely expected to take action soon after its surprise decision to fire the last week.

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