EBC Markets Briefing | UK equities unimpressed by the Tories’ new plan

Shares in Asia edged lower Monday, extending the downbeat end to the week in the US. The FTSE 100 edged lower in the previous session, marking its third consecutive week of decline.

Finance minister Jeremy Hunt unveiled a new "UK ISA" that allows individuals to invest £5,000 tax-free in local stocks annually, in addition to the £20,000 allowed under existing tax-free ISA schemes.

Despite of the ambitious move, many experts reckoned the added incentive to attractive domestic funds would only likely appeal to a small proportion of investors already maxed out on ISA limits.

UK equity funds saw a record £14 billion outflow in 2023, the eighth straight year of loss since Brexit. Savers shun the underperformed market which is still in negative territory for the past 12 months.

The valuation discount of the FTSE All-Share index versus MSCI's World index is now at a record near 40%, and UK weightings in that World index have more than halved to just 4% over the past 15 years.

DC plans and local government pension schemes would have to comply with new requirements to disclose publicly their level of international and UK equity investments, piling pressure to invest more in British firms.

The FTSE 100 has been largely range-bound since May. It is flirting with the 50 SMA and 7,430 is the key support to watch. If it turns bullish instead, a stampede of sellers could step in around 7,800.

EBC Financial Market Forecast Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment, or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Financial Market Forecastor the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person.

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