RE: UK's Move to Soften Airport Slot Rules25 Jan 2022 08:04
Morgan Stanley notes six reasons why UK markets should outperform the broader European market over the next few months:
1) UK tends to outperform in risk-off periods - "over the last 20 years, MSCI UK has outperformed MSCI Europe 68% of the time during periods when global equities are falling," says Secker.
Defensive sectors account for 37% of UK market cap according to Morgan Stanley.
2) UK is a relative beneficiary of higher real yields - "a move up in US real yields to our bond strategist's target of -10bps would point to c. 12% outperformance of MSCI UK versus Europe-ex-UK," says Secker.
3) UK is one of the cheapest major global stock markets - "At 12.6x, the FTSE100 is the cheapest major index versus its own 10-year history," says Secker.
4) UK to benefit from increased focus on dividends - "MSCI UK's dividend yield of 3.6% is currently twice as high as that on offer from MSCI World and nearly 150bps more than MSCI Europe-ex-UK."
5) EPS expectations are very low for the UK
6) UK is a key beneficiary of our positive view on oil - "A rising oil price is very positive for UK EPS, given that 25% of UK profits comes from Energy sector," says Secker.