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Peel Hunt, a City broker, has stated that Labour's potential leadership could attract foreign investors and boost the London stock market.
According to analyst Charles Hall, a Labour government with clear plans and stability would improve the perception of the UK among overseas investors.
Peel Hunt estimates that British-listed shares are currently undervalued compared to international markets, and a change in government could help address this issue.
The UK's reputation for instability in recent years, including events like the Scottish independence vote and Brexit referendum, has contributed to this undervaluation.
Mr Hall stated that in order for a foreign investor to consider investing in another country's market, they must have confidence that the market will remain stable over the next three, five, or 10 years.
He emphasized that uncertainty is the main deterrent for long-term investments. Over the past 18 months, Labour has effectively persuaded investors of its pro-business stance.
With the upcoming general election and potential interest rate cuts by the Bank of England, Mr Hall believes that there could be a positive impact on British households, leading to increased domestic investment.
Taking all these factors into account, Mr Hall anticipates a potential upturn for British stocks, suggesting that the period of significant underperformance for UK equities may be coming to an end.
Peel Hunt is not the only one becoming more optimistic about the prospects of Britain. Europe's largest asset manager, Amundi, also foresees UK stocks outperforming those in the US and Eurozone over the next ten years. Amundi, which oversees £1.8tn in assets, attributes this projection to geopolitical uncertainty and the appeal of London-listed companies that offer substantial dividends.
The investment behemoth anticipates a 7.3% growth in UK-listed equities over the medium to long term, surpassing the expected growth rates of 6.8% in Europe and 6% in the US.
Mohit Kumar from US investment bank Jefferies also expressed a positive outlook on investing in the UK, citing recent tax cuts by the Government and the potential for borrowing costs to decrease faster than anticipated.
Jefferies has maintained a larger portion of UK stocks compared to the rest of Europe since the beginning of the year.
Mr. Kumar emphasized that in the next two years, the UK presents an attractive investment opportunity, with potential fiscal and monetary stimulus, including the possibility of additional tax cuts and more aggressive interest rate cuts by the Bank of England.
He also noted that the UK's economic growth is not as dire as some may perceive.
