Interestingly, UK companies themselves have continued to invest and innovate.
We believe innovation is critical for companies to sustain their competitive position and drive long-term cash flow growth.
Many investors may be unaware of the inspired, broad ranging and often world-class innovations UK companies have delivered.
Current low valuations may provide an attractive entry point to reap the long-term rewards of these innovations.
Driven by decades of investment, UK pharmaceuticals companies are pivotal in improving cancer survival rates globally.Using technology in a smart way can help improve efficiencies, keep employees safer and be more sustainable for the environment.
UK resources companies are deploying unmanned aircraft systems to inspect equipment in challenging locations.
Others are operating the world’s largest ‘robots’ in the shape of fully autonomous, driverless trains, transporting base metals over many hundreds of miles.
UK chemicals and industrials firms are investing to enable the global transportation shift from combustion engines to electric vehicles.
Among consumer goods, the UK has one of the leading global e-commerce grocery delivery companies, which recently added vertical farming to its solutions. This is the practice of producing food in vertically stacked layers inside a building.
Some of the advantages include the ability to produce crops year-round in all climates while using significantly fewer fossil fuels, as well as water. It also offers the possibility for urban centres to become self-sufficient, with improved access to freshly picked produce.
We could reach a stage where city-based customers can have tomatoes, lettuce and basil delivered to their homes that have been picked within the past hour.
The UK’s consumable product innovation continues to lead.
This is seen within UK beverages where White Walker scotch, inspired by TV show Game of Thrones, sold one bottle a minute on Amazon UK in its first 24 hours.
Gordon’s Premium Pink Gin ranked as the second fastest-growing grocery product of 2018.
A UK company has successfully managed to create and dominate the UK market for premium-priced, high quality soft drinks and mixers (particularly tonic water). It is now expanding into the US.
This is also seen within UK food producers.
The UK’s creative content continues to enthral the world.
Within children’s entertainment, TV programme Peppa Pig had more than 1.45bn Chinese viewings of its recent film trailer, while season four has had 12bn Chinese viewings.
This is also seen in broader television content, where we expect the launch of Britbox later this year, to sit alongside Netflix.
The series Broadchurch has been sold in more than 100 countries and exclusive broadcasting rights have recently been signed for BBC series The Bodyguard in China.
Driven by decades of investment, UK pharmaceuticals companies are pivotal in improving cancer survival rates globally, as well as in the prevention of serious diseases through vaccinations.
So yes, we agree the economic and political outlook for the UK is uncertain in the short to medium-term, but we believe this has resulted in the UK equity market looking relatively attractively valued.
Many UK companies have built strong, globally competitive positions based on decades of investment and innovation.
To us, it appears that the current uncertain outlook could provide precisely the entry point for attractive, long-term UK investment opportunities.
Tineke Frikkee is head of UK equity research at Waverton Investment Management
