Richard Buxton: FTSE could break 7,000 next year

Old Mutual Global Investors’ (OMGI) Richard Buxton has forecast the FTSE 100 index to break through levels last seen at the height of the tech bubble in 2000.

Mr Buxton, who joined the firm as head of UK equities from Schroders earlier this year, said the UK market was set for a prolonged period of higher returns after trading broadly flat in the past 13 years.

“The range of the equity market is going to move up - I think we will break out above 7,000,” Mr Buxton said. “I have already said I think we are through the worst and I stand by that. We are in for a much better period in the UK.

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“In the short term tapering may increase volatility but it is amazing how resilient the UK market is. Equities can still rise alongside gently rising yields.”

The manager of the Old Mutual UK Alpha fund said he remained “optimistic and upbeat” in spite of outlining several major issues which could disrupt the global economic recovery.

As well as the start of tapering of quantitative easing in the US, Mr Buxton’s concerns included overly optimistic earnings forecasts in US companies and the resurgence of tensions in the eurozone.

“It would be no surprise if one of these factors caused a wobble later in the year,” he said.

Mr Buxton was speaking publicly for the first time since joining OMGI in June, ahead of a two-month roadshow promoting the firm’s UK equity team.