UK stocks have been lagging since the 2016 Brexit referendum, and they haven’t done any better with it boris johnson running the country.
Both the FTSE 100 and the locally-focused FTSE 250 have fallen nearly 8% in dollar terms since the outgoing prime minister took office in July 2019, a bleak since Brexit has kept investors away from UK assets. With economic outlook and political upheaval.
This means significant underperformance during Johnson’s tenure as the S&P 500, which is up 29%, and MSCI All-Country, which is up 14%. Returns for the Euro Stokes 50 have been similar to those for the FTSE 100, although European gauges have substantially outperformed the UK since Brexit – a pillar of Johnson’s political legacy.
Meanwhile, the pound hit a two-year low against the dollar this week and only achieved a sneaky surge following Johnson’s resignation. UK shares edged higher on Thursday along with broader markets.
“Changes in the political landscape are usually something investors don’t like, but it was only a matter of time before Johnson fell, so there is relief now that the British government can finally close the BoJo chapter and so forth. may increase,” he said. Ipek Ozkardeyskaya, senior analyst at Swissquote.
The poster child of underperformance could be the travel and leisure sector. The FTSE 350 Travel & Leisure Index is down 42% since Boris Johnson took over, while its continental European counterpart is down 17%. Labor shortages and cost inflation have decimated the sector in the UK, with Brexit making it harder to hire workers.
The local economy is also not doing well. UK retailers fell around 3.5% in local currency terms over the nearly three-year period, while global retailers are up 14%. Banks have also suffered, with benchmarks for UK banks down 16% in Johnson’s office hours and global banks down 6%.
Prime Minister’s resignation is now fueling speculation about a possible change in fiscal policy that could boost the UK stock market.
relatively frugally Rishi Sunki No longer serving as Chancellor of the Exchequer, some are betting that candidates for the conservative leadership may seek support by pledging to cut corporate taxes. This could give a much-needed lift to domestic stocks, with the levy on companies set to increase from 19% to 25% next year.
Meanwhile, a stronger makeup of commodities, along with a weaker pound and 75% risk in overseas revenues, has allowed the FTSE 100 to eventually outperform this year. The blue chip index has fallen less than 3% in 2022, while the global counterpart is down about 20%.
Dehli, some remain negative about what lies ahead for UK markets amid a cost-of-life crisis and monetary tightening by the Bank of England.
Evercore ISI analysts Krishna Guha and Peter Williams said there was “zero chance” of a soft Brexit turning around. UK assets “will be dominated by the threat of twisting dynamics and the associated pressure on the Bank of England to speed up the hiking. In an unfolding economic downturn rather than a political change of the guard.”
This story has been published without modification in text from a wire agency feed. Only the title has been changed.