Investing.com – Investors should take care when investing in UK equities, according to UBS, as although the underlying macroeconomic backdrop remains supportive, the earnings recovery is likely to be slow.
The Swiss bank maintained a neutral rating on UK equities.
The underlying macroeconomic backdrop is currently supportive with domestic GDP growth recovering, earnings bottoming, and the Bank of England having started to cut interest rates, analysts at UBS said, in a note dated Nov. 21.
But there are risks on the horizon from higher tariffs, and the recent move up in bond yields on the back of the US election is an incremental headwind to valuations.
Given an uncertain economic outlook, investors searching for growth may continue to focus on structural themes, such as AI, to which the UK equity market has limited exposure.
The ‘s current forward P/E valuation of 11.4x remains at a discount compared to its long-run average of…
