Investing.com – UK equities have performed relatively poorly this year, but investors should be wary of the resultant valuation, according to UBS, as the indices are “cheap for a reason.”
The UK benchmark has gained 7.7% so far this year, but this compares badly with the German , up 21.6%, the in the US, up 27.7% and the in Japan, up 17%.
“The UK market, the FTSE 100 in particular, looks ‘cheap’ when compared to other markets, as well as its own history,” said analysts at UBS, in a note.
“Currently trading on a forward price-to-earnings (P/E) valuation of 11.4x compared to its long-run average of 12.8x, and with earnings appearing to be bottoming out, is now the time for the FTSE to shine? Unfortunately, the earnings story that supports the market’s valuation, while improving, isn’t doing so enough to drive the index higher, in our view.”
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