BRITISH MIDCAPS COULD FINALLY SEE SOME LOVE
Britain’s FTSE250 midcap index MCX has been long unloved by investors – it’s still 17% below its late 2021 all time high, but UBS strategists are the latest to call a for a rebound in the coming months.
They note British equities trade at a discount to Europe – on both price to earnings and price to book – and “the FTSE 250 in particular offers exposure to high quality businesses at lower valuations than their large-cap peers.”
“This de-rating has been structural, index declined after 2016’s Brexit vote and never fully recovered, leaving UK stocks among the cheapest in developed markets.”
As well as that, UBS see the macro economic picture improving, with a chance the BoE steps up the pace of rate cuts, and note that 2026 earnings projections are looking up.
“Crucially, … the FTSE 250 shows far stronger earnings growth potential than the FTSE 100 or Europe,” write UBS.
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