HSBC says that UK markets are now a ‘bargain’

"The long-term structural overhang of UK pension fund selling is at an end," according to HSBC analysts, and this gives a "golden opportunity" to purchase.

In fact, the bank now anticipates that political pressure will cause the selling trend to reverse and that capital will begin to flow back into UK shares.

Pension funds' holdings of UK funds have decreased from 53% in 1997 to about 4% at present time. According to the bank, any future sales would barely have an impact at this point.

Over that time, pension funds are estimated by HSBC to have liquidated about £2 trillion worth of assets.

When HSBC updated its investment outlook from "underweight" to "neutral" to "overweight" last year, it showed greater bullishness towards the UK market.

The bank has also raised its prediction for the FTSE100 final year position from 8,100 to 8,750.

HSBC claims to be positive even if Labour wins the next election because this would eliminate uncertainty for potential UK business investors.

According to HSBC, the gap between the London and US stock markets is currently 23% more than usual.

(Sources: investing.com, proactiveinvestors.co.uk)