Recent turbulence in the global stock markets has made it difficult for investors to know whether to buy or sell. Sometimes, however, there are rewards to be found, and opportunities to take advantage of.
With the FTSE 100 only down 3% in 2025 compared to steeper drops on Wall Street, should investors be leaning more towards British funds and shares?
Now may be a good time for any UK portfolios to be reviewed – although it’s always important to get a second, professional opinion. There are a number of reasons why the British market is cheap; this is due in part to the price-to-earnings (p/e) ratio, a common gauge of value. Prior to recent events, the FTSE 100 had been trading at nearly 12 times forecast earnings, compared to the US on 21 and Europe on 13.9. This meant that British shares were around 43% cheaper than American ones.
UK shares also currently offer better divided yields than rival markets. Data collected before the tariff announcements showed that the income from UK shares stood at 3.8%, compared to 1.8% for global stock markets and 1.2% for the US. While the ability of companies to pay out dividends might be impacted by economic uncertainty, notional yields will be nudged up by dropping share prices.
The other aspect to consider is the resilience of the British economy. The 0.5% growth in UK GDP in February reflected the strength of manufacturing, automotive, electronics and pharmaceuticals; while inflation scored lower than expected at 2.8%. If you are investment planning in Cheshire, also note that 70% of the International Public Partnership investment trust’s (INPP) infrastructure projects are in the UK.
