U.K. Markets: Brexit, Pound, and Cheap Stocks

The video discusses the performance and valuation of UK indices, particularly the Footsie 100 and 250, highlighting their earnings sources and recent performance. It examines why UK equities are considered cheap, focusing on cyclically adjusted valuations and the impact of commodity prices. The video also compares dividend yields of UK equities with government bonds, emphasizing income opportunities. It addresses concerns about Brexit's impact on UK stocks, suggesting a focus on large-cap companies with overseas revenues. Finally, it explores sterling's valuation and economic forecasts, considering potential future movements.

What is the approximate earnings distribution for companies in the Footsie 250?

• Majority from overseas

• Roughly 50% from the UK and 50% from overseas

• Majority from the UK

• All earnings from the UK

Why are UK equities considered cheap on a cyclically adjusted basis?

• Due to high inflation rates

• Because of a period of extreme earnings weakness

• Because of strong commodity markets

• Due to high interest rates

What makes UK large-cap equities attractive from an investment perspective?

• Low dividend yields

• High dividend yields compared to global markets

• Low risk compared to government bonds

• High volatility

How might a hard Brexit affect UK companies with revenues from abroad?

• It would negatively impact their revenues

• It would have no effect

• It would increase their operational costs

• They might benefit from a weaker domestic economy and currency

What is the realistic forecast for Sterling against the dollar according to the discussion?

• 1.15

• 1.05

• 1.20

• 1.30