In terms of an early Christmas present, the UK market received its very own ‘secret Santa’ gift last month with the first net inflow into funds invested in UK stocks since April 2021.
According to data from consultants Calastone, fund flows turned positive in November after record outflows in October and a negative run lasting 41 consecutive months.
Admittedly, the £317 million of net buying was a tiny fraction of the £25.33 billion of cumulative selling since April 2021 but it still represents a milestone and may mean investors are finally willing to bet on UK stocks.
There was a stampede out of UK equities in October over fears the chancellor would hike capital gains tax and change the rules on inheritance tax for AIM stocks.
However, according to Calastone’s head of global markets Edward Glyn almost half of October’s outflows came back into the UK market in the first week of November.
Glyn sought to play down suggestions November’s inflows marked a sea-change in attitudes towards the London market.
‘Time will tell, but the inflow to UK-focused funds is likely to be a hiatus rather than marking a break in the trend. There is no major catalyst on the immediate horizon to prompt a wholesale resurgence of interest in the much unloved UK stock market.’
As Shares and many other observers have noted, the UK stock market looks cheap on just about every measure relative not only to other markets but also against its own historic track record.
Yet value alone isn’t enough to make share prices go up – there needs to be a catalyst.
It is worth flagging UK equities weren’t unique in seeing inflows last month – equity funds across the board took in just over £3 billion, a new monthly record.
Most of that cash went into global (£1.2 billion), North American (£848 million) and emerging market funds (£426 million) according to Calastone.
One area of the UK market which is likely to be in focus in the coming weeks is retail and the table shows when the big names from the sector are set to provide their Christmas updates.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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