Premier Miton Investors plc (LON:PMI) Head of Equities Gervais Williams caught up with DirectorsTalk for an exclusive interview to discuss the global stock market recovery, the impacts of US market on the UK and the benefits of the UK market having a wider investment universe.
Q1: The global stock market recovery seems to have peaked out in recent days, do you think anything significant has changed?
A1: I do see that some of the data coming from the bank lending, particularly in the US bank lending, seems to have come under real pressure, just in the last few days. It’s all very well injecting quantities into the global economy but if the banks don’t lend it doesn’t really get to the financial markets. I don’t know if this is something which is of a temporary nature or a more significant feature but it is interesting that this happened at the same time that markets are beginning to peak out.
Q2: That being the case then, to what degree will the US market setback affect the UK?
A2: The UK market is very different from the US stock market, most particularly it hasn’t really risen very much in recent months, partly because it’s got a lot of energy and financial stocks which are being much less popular than many of the high velocity stocks in the US.
That said, many of these are generating cash, they continue to generate cash and hopefully, if people do take profits, that will be a feature that will lead to these companies hopefully holding out better than the main markets around the world.
Q3: Finally, the UK market has a much wider investment universe than others, will that really make enough of a difference do you think?
A3: Again, it’s probably too early to say. The whole point about the UK economy is that really its prospects aren’t any better than most of the others out there.
The UK stock market itself, with a much wider investment universe, with lots of quoted companies, regular businesses generating cash, investing for cash payback, those companies operating in immature markets are able to buck the economic trends.
I’m not saying their share price will necessarily go up when the market’s going down but hopefully, they’re much more resilient. Most particularly, we would argue that if unfortunately, companies are going bust, quoted companies can sometimes acquire other assets, keep those staff in jobs, get a cash payback and generate a better return, sometimes transformational return.
So, it’s a good area if you’re looking for areas to buck the economic trend, that is one area where we are quite upbeat.
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