When Ronald Reagan said that the nine most dangerous words in the English language were “I’m from the government and I’m here to help,” he provoked a storm of protest from all sides of the political debate. Governments clearly can help drive competitiveness through improved skills policies, by investing in infrastructure and housing, as well as supporting innovation through R&D and incentivizing capital investment towards startups. Indeed Reagan embarked upon a radical new industrial strategy – the Small Business Innovation Research program – which between 1995 and 2018 generated an additional $184 billion in value added. But governments and investors

On January 30, 2024, the HM Treasury has confirmed that European Economic Area (EEA) states will be considered as “equivalent” under the new Overseas Fund Regime (OFR) for UCITS, excluding money market funds. The OFR is expected to be rolled out in April 2024 to replace the Temporary Marketing Permission Regime (TMPR) within a prolonged transition period until December 2026 to smoothen the transition. The new OFR shall remove post-Brexit barriers for newly launched EU-domiciled funds and ETFs to enter the U.K. market when the products meet the necessary retail disclosure requirements. Even further, the U.K. government does not intend

The British economy has been rattled by a cost-of-living crisis fuelled by higher energy prices which has resulted in the Bank of England (BoE) raising its policy rate by 200 basis points to 2.5% since the beginning of the year with further rises to follow.  Currently, this ranks as the eighth largest annual increase in the base rate going back to 1900 (Source: Refinitiv Datastream). Using the Interest Rate Probability App in Refinitiv Workspace, markets are pricing rates to rise to 4.5% by the end of the year which would result in an increase of 400 basis points in 2022. 

U.K. large-cap equities continue to be resilient in the face of multiple headwinds, as the FTSE 100 is the third strongest performer year-to-date.  The index is up 4.7%, only behind to the Brazil Bovespa Index (+9.1%) and OMX Oslo All-Share Index (+10.5%). We note possible reasons for relative outperformance in a prior note which include index composition (higher tilt towards value), attractive valuations and higher dividend yields (A Case for U.K. Equities: Valuation and Yields Look Attractive, March 31, 2022).  However, we note that small-cap companies have underperformed as the FTSE 250 has declined 9.2% year-to-date in the face of

U.K. equities have generally underperformed its global peers consistently over the last decade.  The FTSE All Share has experienced a compound annualized growth rate (CAGR) of 4.7% and 7.3% over the last 5 and 10 years respectively.  In comparison, the Russell 1000 CAGR over this same period is 16.5% and 14.9%, while the Datastream World Market CAGR is 11.1% and 9.9% respectively. The start of 2022 has been one of the most volatile on record which we highlight in a prior note (Data Insight: A Turbulent Start to the Year for Global Equities, January 27, 2022).  To this point, the

As the UK plans on exiting the European Union on March 29, 2019 (at 11pm GMT for those interested), a lot has changed since the initial Brexit vote. We looked at how the markets reacted immediately after Brexit and decided to check in again one year before the inevitable deadline. This report gives a picture as to how industry analysts view UK equities and which industries are seeing the most positive and negative sentiment. Equity valuation levels are also analyzed on an aggregate basis to see how undervalued or overvalued the UK market is relative to its peers. Where’s the

Equity, forex and fixed income markets are reacting differently to Brexit.