It’s been a promising start to 2021 for the FTSE 100 but is now the time to place your investments in the UK stock market or is it still too early to tell?
In recent years, the UK Stock Market has been experiencing its lowest performance since the financial crisis of 2008, largely due to the Brexit referendum and the uncertainty that has followed the result.
However, the start of 2021 saw a 6% jump in the FTSE 100 and the Sterling has seen a rise in value, raising the question of whether now is the time to start investing in the UK market.
Certainly the UK / EU trade agreement has ended years of political uncertainty which resulted in the UK stock market experiencing its worst performance for years while the US experienced record highs. UK shares have been found to be trading at a 30% discount when compared to their international counterparts, a reflection of weak investment in UK business, however, it’s not all doom and gloom.
Prices are starting to recover, largely due to the seemingly endless profusion of money being printed by the central banks as well as record government borrowing. This was last seen during the ‘roaring twenties’ when the world recovered from the 1918-20 influenza epidemic, giving way to a decade of indulgence and consumerism. The best news for the UK economy has come in the form of the vaccine, and being the first country to approve it for use has only strengthened the UK’s economic position.
2021 could be a year of record growth, as lockdown savings re-enter the economy and people emerge from lockdown looking to satisfy their social needs with a consumer boom. In December alone there were 105,000 approvals for mortgages, a record high for 13 years and foreign investors are starting to turn their attention to the UK market.
There are still plenty of reasons to be cautious, not least the government’s ability to roll out the vaccine in a timely manner, however, things are beginning to look up, and now might just be the best time to take advantage of an undervalued UK market.