UK Equities: Short-Term Pain, Long-Term Value
UK Strategy Matters, September 5
UK Plc is arguably more optimistic about its fortunes than investors; companies have bought back shares worth £1.5 bn per month in the last few months, well above the levels in 2008/09 but below those in 2006/07. We also think there is value in equities both versus bonds and relative to growth prospects. We retain our 12-month FTSE 100 target at 6,200. But the near-term risks are high, the macro data has been weak, earnings estimates need to fall and there is no sign of a resolution to the debt funding issues in Europe. We shift slightly more defensive in our sector views.