Morgan Stanley: British stocks cheapest in world
According to Morgan Stanley, UK stocks are the cheapest in the world and could rise if inflation eases.
The US investment bank told clients: “Investor pessimism towards the UK is currently high. However, sentiment may shift if inflation starts to ease.”
Inflation remains stubbornly high at 8.7 percent — more than four times the 2 percent target — despite interest rates rising from 0.1 percent to 5 percent since December 2021.
Morgan Stanley said the Bank of England may be forced to raise interest rates beyond 5.5 percent to bring inflation back under control.
But even with a “challenging autumn ahead,” the bank’s analysts were positive on a host of British stocks, including defense giant BAE Systems (up 1 percent, or 8.8 pence, to 897 pence), oil giant BP (plus 0.2 percent, or 1p, to 454.55p), Asia-focused insurer Prudential (0.4 percent, or 4.5p, to 1043.5p), mining company Rio Tinto (1 percent, or 46.5p, to 4868 .5p), Haleon (0.8 percent, or 2.6p, to 311.4p), and pharmaceutical group AstraZeneca (0.7 percent, or 70p, to 10180p).
Warning: Morgan Stanley said the Bank of England may be forced to raise rates beyond 5.5% to bring inflation back under control
After the stock market closed last night, BAE has secured £280 million worth of orders from the Ministry of Defense to supply ammunition in a deal that could be worth up to £400 million and will create 200 jobs in the north of England and south Wales.
The FTSE 100 was back in positive territory after five consecutive losing sessions.
The blue-chip index rose 0.2 percent, or 16.85 points, to 7273.79 and the FTSE 250 was up 0.1 percent, or 23.99 points, to 18027.96.
Water companies led the blue-chip index following the £750 million cash injection from Thames Water.
Severn Trent added 1.6 percent, or 38p, to 2432p and United Utilities gained 1 percent, or 9.4p, to 941p.
There was also good news for student housing provider Unite Group: reservations for the coming academic year were at record levels.
The group said it had sold 98 percent of rooms for 2023-24 by the end of June, compared to 91 percent for 2022-23.
The value of his property portfolio increased by 1.2 percent to £2.9 billion in the second quarter of 2023.
Unite also raised its rental growth forecast to 7 percent for the next academic year, up from a previous range of 6 percent to 7 percent. Shares rose 1.2 percent, or 10p, to 857p.
Shell rose 1 percent, or 22.5p, to 2305p after Deutsche Bank Research issued a buy rating and raised the oil giant’s price target from 2907p to 3268p.
The broker pointed to the blue-chip company’s “refreshed team,” which has appointed Wael Sawan as CEO this year, a finance boss 14 months ago and a head of its Upstream division in October 2021.
Online trading platform Plus 500 said it had benefited from a strong performance in the US and wanted to expand its reach in Japan and the United Arab Emirates.
Revenues of £288m in the six months to the end of June were 15 per cent higher than in the same period a year ago, despite a slowdown in wider market trading.
City broker Liberum also highlighted the company’s ‘very clear commitment to maximizing shareholder value’ after Plus 500 said it had returned more than £187m to shareholders so far this year.
Shares were flat at 1470p.
Future outlined plans to return cash to shareholders with a proposed £45 million buyback programme.
The magazine publisher behind Country Life, Marie Claire and FourFourTwo, said it would seek investor approval at a general meeting to be announced shortly. Shares rose 6.1 percent, or 42 pence, to 735 pence.
Property landlords traded lower due to downgrades from HSBC. Hammerson fell 2.6 percent, or 0.64p, to 23.98p, Land Securities fell 1 percent, or 5.6p, to 566.6p and Segro lost 0.5 percent, or 3.6p, to 706p.
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