After a Brexit-induced hiatus, marginal buyers are coming back to the UK. Overseas demand for UK gilts has never been higher. Offshore private equity firms are competing for a deep pool of attractively valued businesses. And, with some of the highest free cash flow yields in the world, many UK blue chips have started to pull the buyback lever as part of broader plans to return capital to shareholders.
Combined, these are firm signs that confidence in the UK is returning. Businesses are in good shape, the post-Brexit, post-Covid outlook is brightening, and the stock market continues to trade at a discount to global peers - for now. A renaissance for neglected old economy stocks? Today's situation is markedly different to the pre-pandemic peak in buybacks when Trump's tax reforms (and, in some cases, cheap leverage) drove a buyback bonanza in the US that spilled over to the UK. What stands out today is the highly unusual situation whereby larger incumbents - the so called "old econ...
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