One of France’s largest banks told its clients to withdraw their money from the Eurozone and send it back to Britain.
BNP Paribas, the investment bank, has advised clients to invest in British stocks. The reason given was that the pound is cheap, there are a variety of attractive sectors, and the British economy performed better than expected.
Analysts at the bank have recently changed their preference for allocating money from the eurozone towards the UK and encourage investors to follow their advice by investing in the largest UK listed companies.
The endorsement comes as a boost to the London Stock Exchange, which is under pressure due to fears that it will lose relevance and power amid a mass exodus from listed companies.
Viktor Hjort is the head of Credit Research. He said, “The outlook for UK equity markets is not at all bad.” The FTSE market is a value-oriented market. There are many banks and energy companies in the area. “You can check the oil prices to see where the energy is going.”
Oil Prices are Up By Around a Quarter Since Late June. They reached 10-month Highs This Week as Saudi Arabia & Russia tighten supply to counteract the falling demand. BP and Shell are benefiting from the rising prices, which account for around 13pc in the 100.
rates of interest have increased the fastest since the 1980s, boosting banks’ profits. Financial stocks make up almost a fifth by value of the 100.
Companies in high-growth sectors, such as technology, are usually highly leveraged. They are therefore more sensitive to interest rate increases. It means that markets like the US with more tech companies are riskier.
Mr Hjort stated: “We believe this type of environment is quite favorable to value investing as opposed to growth. The UK is an excellent example.”
He said that another factor in Britain’s favor is “values are cheaper”. JP Morgan said earlier this summer that British listed companies were the most affordable in the world due to “very gloomy’ sentiment towards the UK.
The UK economy is doing better than that of the Eurozone. BNP Paribas economists expect Britain to enter a mild recession during the first half next year. However, they said the economy has proven more resilient than anticipated.
The eurozone faces the possibility of a double-dip recession following the revision last week to the quarterly growth figures.
Paul Hollingsworth said that there was “a lot” of pessimism about the UK after Liz Truss became prime minister.
He said, “There was much caution regarding UK assets. Since then, things have changed. We saw that the economy performed much better than expected.
“When we talk to people, they agree that it will be a weak period ahead but not a major downturn. Partly because of the underlying resilience that is present.”
BNP Paribas, one of Europe’s largest banks, has assets worth more than €2.5 trillion.