Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

London market a bargain as pension funds stop selling, says HSBC

Published 21/05/2024, 11:48
© Reuters.  London market a bargain as pension funds stop selling, says HSBC

Proactive Investors - A second City investment has said now is the time to buy UK shares as pension funds have “nothing left to sell”.

According to analysts at HSBC (LON:HSBA): “The long-term structural overhang of UK pension fund selling is at an end” and now represents a “golden opportunity” to buy.

In fact, the bank now expects the selling trend to reverse due to political pressure and for money to start to move back into UK equities.

Holdings of UK funds by pension funds have dropped from 53% in 1997 to around 4% currently and the bank said this percentage is now so small that any further sales would hardly make a difference.

In total, HSBC estimates that pension funds have sold almost £2 trillion of assets over that period.

HSBC became more bullish on the UK market last year when it moved its investment view from 'underweight' to 'neutral', with this now upgraded again to 'overweight'.

The bank’s forecast of where Footsie will end the year has also been increased to 8,750 from 8,100.

Even if Labour wins the next election HSBC is bullish it says as this would remove uncertainty for potential roadblock investors in the UK.

HSBC calculates the discount of London to the US stock market is currently 23% wider than normal.

Last week another City broker, Panmure Gordon, said “UK valuations remain deeply subdued compared to their historic norms both on a relative and absolute basis,” with discounts only narrowing slightly to 17% from 19%.

The opportunity is "real, broad-based across all sectors and amplifies at the mid and small-cap level", said the broker.

“The opportunity for investors [in the UK] continues to hide in plain sight”, Panmure Gordon concluded.

Read more on Proactive Investors UK


Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.