Fresh Intel

[upbeat music] So, if you're a regular listener of the podcast, you'll know that we've never really loved investing in the UK market.

But with a new prime minister, we thought it's a fitting time to discuss what's been going on again.

In recent years, we've seen a UK market exodus with companies such as Sunbelt, formerly Ashtead, Ferguson, CRH, and Flutter Entertainment all deciding to have their primary listings in the US, as well as Arm, who bypassed the UK entirely for its return to public market in 2023.

Then only last week, there were rumors of UK pharma darling AstraZeneca merging with US pharma giant Bristol Myers Squibb.

So there doesn't seem to be much to get exci- excited about with the UK stock market despite the valuation gap.

Turning to you first, David, what can Andy Burnham really do to get you excited about the UK market again?

Wow, where do you start? Um, what can Andy Burnham do to make me excited? Not a lot is probably...

Well, there's not a lot he can do given the fiscal ceiling that we've already met, but I think let's try and be a bit more positive.

Perennially, many strategists cite the UK market as being cheap, and many asset allocators and optimizers point to the fact that the UK is quite a good cheap market, and every now and again there's a flutter of excitement.

Um, there was at the beginning of the year.

Is it seen as a defensive market? I'd question that given the makeup, and we'll come back to that maybe a bit later.

But undoubtedly, if you just looked at a pure, you know, at most valuation metrics-

Hmm

...

when you compare the UK purely at the index level versus other geographic jurisdictions, it does look optically cheap.

Now, our argument forever has been, yes, but when you compare it on a sector-by-sector basis, it's not.

And bearing in mind there's almost no technology sector in the UK market, and comparing that to the US, it doesn't seem particularly sensible.

So, if it's not valuation that's going to generate the excitement, what, what else could be done? It does feel like, and it...

This is not a political point, but over the last, I don't know, decade, two decades probably, really going back to the sort of the '90s, late '90s, ear- early noughties, we've had most governments being pretty anti-capitalist when it comes to the stock market, and then very little to help.

And, you know, coupled with issues around remuneration for senior execs in these big companies and, and this kind of almost cultural pushback against companies and enterprises and this kind of need to, to almost punish them with...

You know, all we hear is windfall taxes and, uh, on certain sectors like banking or in North Sea, for example.

The, the, the, the overarching dialogue is always pretty negative.

And if you go to the US, that- [laughs] it's almost diametrically opposite to that.

So, the first thing he could do is, is, is, is try and change this narrative a little bit and say rather than tax more the broad shoulders, how about the people who have been really successful pay the most tax? And turn it around slightly.

Now, that's maybe me being naive, but that's a...