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UK equities predicted to see most gains

UK equities predicted to see most gains

The UK equity market will see the most gains in 2019 as "cautious optimism" grows in a slightly more bullish market, an investment management firm has predicted.

In its annual market outlook survey, Redmayne Bentley analysed the predictions of its investment managers and stockbrokers for 2019.

Of the 66 respondents surveyed, 41 per cent predicted the UK equity market would see the most gains next year, while 24 per cent predicted it would see the biggest losses.

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At the same time 32 per cent believed Europe would see the biggest losses.

When asked about the performance of the FTSE 100, opinion was divided. About 55 per cent predicted it to be bullish, while 45 per cent envisaged a bearish market in 2019.

Brexit also remained a divided topic going into the new year.

Of the Redmayne Bentley respondents, 27 per cent predicted  Brexit would represent the biggest positive for investors next year closely followed by technological advancements at 26 per cent.

But Brexit also gave cause for market worry, with 36 per cent naming it as the greatest cause for concern - followed by global trade wars at 29 per cent.

James Rowbury, investment research coordinator at Redmayne Bentley, said 2018 had been a "rollercoaster year" for UK domestic politics. 

He said: "While the overriding theme of our survey rested on Brexit, a cautiously optimistic tone dominated responses, with 55 per cent of our respondents saying that, going into the year, they were bullish for UK markets.  

"Most harboured the view that UK equity markets now appeared oversold and undervalued; after all, the FTSE 350 index price to earnings multiple now resides at a five-year low of approximately 12x."

Mr Rowbury said the possibility of the Labour party triggering a vote of no confidence in the Government and seizing the opportunity to revoke Article 50, was a "widely expressed" concern across the survey’s respondents.

He said: "Respondents felt a Corbyn-led government would severely limit upside potential, owing to policies around renationalisation. 

"However, with a Labour government relatively low down in the realms of possibility, 35 per cent of respondents cited the word 'uncertainty' as their biggest concern; a buzzword epitomising the difficulties facing UK business."

Technology appeared to inspire the most confidence in Redmayne Bentley stockbrokers, with 48 per cent of respondents naming it as the sector they felt most optimistic about for 2019. 

In contrast the retail sector was expected to see the most upset next year, with 48 per cent predicting it to be the most disrupted sector. 

The financial services sector featured joint second alongside travel and leisure as the most likely to be disrupted in 2019, both predicted by 8 per cent of respondents. 

Mr Rowbury said: "The retail sector’s woes have been well-documented during 2018 and investment managers and stockbrokers expect its struggles to continue into next year, with the rise of online retail and a reduction in disposable income among consumers cited as among the main concerns.

"One respondent said the success of the tech sector could be a factor, citing it as the 'Achilles for retail'."