A French bank has told its clients to ditch the Eurozone and instead back the UK.
The investment bank BNP Paribas has told its clients to move their cash into British stocks.
The bank has switched their preferred allocation to the UK, encouraging investors to follow suit and move their money into UK stock exchange listed companies.
The cheap pound is said to be seen as an attractive investment to banks and their clients.
The view of the London skyline from Windows Bar in central LondonPAThe UK’s combination of sectors and the economy’s impressive performance have also been cited as factors for the changeover.
London’s stock market has been plagued with fears of losing its dominance due to companies leaving post Brexit.
However, the bank’s decision to back Britain could bolster London’s stock exchange and ease their fears.
The bank’s head of credit research Viktor Hjort said: “The outlook for UK equities is not bad at all. The FTSE is a value market. It has lots of energy and materials and a lot of banks. You can look at the oil price to see where energy is going.”
Oil prices have risen heavily since June, reaching a 10-month high this week due to Saudi Arabia and Russia reducing the supply.
Energy giants BP and Shell will benefit from the increase in prices.
Both companies account for around 13 per cent of the FTSE 100’s value.
Banks are also benefiting from a rise in interest rates, which has boosted financial institutions’ profit margins.
Hjort said: “We think this kind of environment is quite favourable to value investing in general as opposed to growth. The UK is a pretty good example of that.”
MONEY LATEST:
London’s stock market has been plagued with fears of losing its dominance due to companies leaving post Brexit.
PA
Companies in the UK were some of the cheapest in the world due to a “gloomy” sentiment towards the UK post Brexit, according to JP Morgan.
However sentiments have begun to change since JP Morgan’s analysis, and now experts predict that the UK economy will prosper more than the Eurozone.
BNP’s chief European economist Paul Hollingsworth said there had been an environment of “pessimism” surrounding the UK after Liz Truss’ time in office.
He said: “There was a lot of caution about UK assets. Things have moved on since then. As we saw, the economy did perform a lot better than people expected.
“When we speak to people they agree that there is some weakness ahead but it’s not going to be a severe downturn, partly because some of that underlying resilience is there.”
