U.K. Equities At Mid-2000 Valuations Amid Fears Of Brexit

With 25% of U.K. equities offering a dividend yield above the corporate bond yield, U.K. equities offer very good value versus bonds, reports Goldman Sachs. Sharon Bell and team said in their research report titled “UK: The market, valuation…. And Brexit” that if a U.K. exit led to a severe squeeze on domestic growth, the FTSE 250, FT Small cap and U.K. domestic-focused companies would likely underperform the FTSE 100.

 U.K. equities - Valuations return to early to mid-2000s levels

Bell and colleagues point out that the FTSE 100 is at the same level as in 1998 and that the recent falls would imply value is starting to emerge. However, they argue that the problem is a lack of earnings growth, with...