Barclays highlights undervalued UK equities as market refuge
by@CNBC
Summary
Investors are increasingly viewing the U.K. market as a viable option amidst global market volatility, according to Barclays strategists, who noted that British equities are currently "cheap" and present "an unloved but not a bad place to hide." With U.K. valuations depressed relative to global peers despite healthy profitability, the market is seen as offering a cushion during turbulent times. Notably, strong merger and acquisition activity and a favorable earnings outlook—raised from 11% to 16% for 2026—underscore the attractiveness of U.K. stocks, particularly in sectors such as banks, industrials, and mining companies, which have shown solid fundamentals and resilience.
Analysis
UBS: UBS Group AG is a Swiss multinational investment bank and financial services company providing investment banking, asset management, and wealth management globally. Its strategists pointed to the UK's improving earnings outlook as a supportive backdrop for equities, leading them to upgrade their earnings growth expectations while maintaining a neutral rating overall. The bank favors areas combining structural growth with cyclical improvement, including banks, industrials, consumer discretionary, and health care. Barclays: Barclays is a major British multinational investment bank and financial services company offering investment banking, wealth management, and retail services. Its strategists issued a note highlighting UK equities as undervalued and strategically attractive amid global market turbulence, citing support from AI and oil dynamics plus robust M&A activity. The firm maintains high conviction in UK industrials, financials, utilities, real estate, and select consumer names. Rentokil: Rentokil Initial is a British multinational pest control and hygiene services company. Barclays strategists named it among their top UK stock picks with the biggest potential upside, supported by attractive valuations and solid fundamentals in the domestic market. Shawbrook: Shawbrook is a UK-based specialist lender focused on business and consumer finance. Barclays analysts included it among their top UK stock picks, emphasizing strong fundamentals and the cushion provided by depressed valuations for domestic financial names. Trustpilot: Trustpilot is a global online review platform that enables consumers to share experiences with businesses. Barclays highlighted the company as one of its top UK stock selections, pointing to undervalued domestic names and increasing M&A optionality as key attractions. Helen Jewell: Helen Jewell is the international chief investment officer for fundamental equities at BlackRock. She described the UK as a compelling diversifier with breadth across HALO industries and dividend payers, noting continued overweight positions in UK banks and mining companies amid commodity strength. Earnings Outlook: The UK's earnings growth trajectory is expected to remain robust, providing a supportive environment for equities even amid domestic economic pressures. Market Valuations: UK equities remain depressed relative to global peers despite healthy profitability, offering a valuation cushion during periods of global volatility. Sector Opportunities: UK banks, industrials, mining companies, and select consumer names stand out for solid fundamentals and exposure to structural growth themes.
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