In a note published on Tuesday titled “Why the UK is a buy,” analysts on Goldman’s profile approach team urged clients to buy UK stocks and also go long on the pound.
Analysts based the phone call on assumptions of a last second, “skinny” free trade deal being struck with the EU along with a good rebound of the UK economy next year.
Goldman predicted UK GDP is going to bounce again by 7.1 % in 2021 – much more than the 5.5 % growth forecast next to the UK’s Office for Budget Responsibility and also above the OECD‘s expectations of merely 4.2 % development.
If Goldman’s sunnier forecasts arrive at pass, the bank considers it will spur UK domestic stocks, like home builders, greater and send the pound soaring. Analysts said sterling might climb as high as $1.44 following 12 months (GBPUSD=X) – eight % above its present level.
Goldman Sachs is the latest investment bank to switch positive on the UK sector, that has underperformed international peers for many years. Morgan Stanley (MS) has made the UK stock markets one particular of its key investment calls for 2021, while Citi (C) a short while ago urged customers to create an “aggressive” short-term bet on the British market. Experts at UBS (UBSG.SW) have also been talking up the UK.
“Overall, we place the UK being a the majority of recommended sector, and the price target of ours for the FTSE 100 is 6,800 by June 2021,” said Caroline Simmons, UK chief buy officer at UBS Global Wealth Management, said on Tuesday.
The FTSE hundred (FTSE) was trading during 6,386 on Tuesday, implying UBS views a possible 6 % rally with the following six months.
The MSCI UK equity sector has already risen by ten % over the past month, outperforming global markets by three %.
“The UK equity market has further to go,” Simmons claimed.
Bullish messages or calls for UK stocks are mostly being pushed by mechanical concerns rather compared to essential optimism regarding the UK economy. Britain suffered one of probably the largest economic collapses of any developed nation in 2020 thanks to COVID 19. Analysts say the big autumn means a big upswing is actually likely next year as vaccines are actually rolled out.
The economic collapse has smack stock rates and the larger fall means UK shares today have much more headroom to bounce back than international peers, majority of which fared better throughout the pandemic.
Analysts say a resolution to Brexit exchange negotiations will likely get rid of uncertainty. That will clear the way for more money to enter the UK, notably via currency markets. The deadline for Brexit trade speaks to conclude is actually thirty one December, when the Brexit transition phase ends.