It’s no secret that FTSE stocks are cheap and have been for a good while now. Finally, investment banks have started to take this seriously, as evidenced by the 11% rise in the FTSE 100 over the past six months.
On May 20, HSBC joined a growing chorus of voices. It upgraded British stocks to ‘overweight’ from ‘neutral’. This means it is recommending that its clients increase their investments in UK shares.
And it raised its target price for the FTSE 100 from 8,100 to 8,750, which would be 6% higher than the current level of 8,235.
Why has HSBC turned bullish?
The investment bank cited a myriad of reasons for this upgrade.
First, it noted that the FTSE 350 index is cheap relative to its historical levels and other markets. In fact, it calculated that London’s discount to New York is currently 23% wider than usual.
This could lead to more mergers and acquisitions.
Second, it argued that higher commodity…
