According to the APP of financial information-provider, a renowned fund manager who manages a UK fund worth about £1.6bn ($2bn) predicts that the UK stock market will rebound significantly regardless of the final result of the UK general election. The fund he manages performed better than 86% of peers worldwide in 2024. This latest forecast suggests that not only the US stocks that keep hitting new highs led by technology giants such as Nvidia are worth global investors' attention, but the UK stock market focusing on undervalued blue chips and value stocks may also win favor from institutions and individual investors.

James Lowen, joint fund manager of JOHCM UK Equity Income Fund, said that the continuous improvement of the UK macro economy and the easing of political uncertainties may boost the depressed valuations of the UK stock market, mainly consisting of blue-chip and value stocks, for many years to come. The fund manager expects that the rise in some of the large-cap stocks he covers in the UK, from 12 to 24 months, will be about 50% to 100%, while the rise in some of the small-cap stocks may be as high as 150%.

"The early UK election is positive because it allows some issues to be resolved and accelerates our emergence from the long "uncertain" period in which we have been." Lowen said in an interview. "In the eyes of global investors, the bright prospects of UK politics will also help the overall UK stock market."

This experienced fund manager has achieved fruitful results by looking for undervalued and cheap targets in UK financial stocks and cyclicals. He said that the overall valuations of UK financial stocks are much lower than those of his famous Wall Street peers in the US. He owns many well-known UK financial companies, including the leader of the UK banking industry Barclays Plc, NatWest Group Plc, Standard Chartered Plc, and the insurance company Aviva Plc. He said that the capital allocation of the entire industry has become clearer, and the management team has been simplifying its business.

Lowen said in an interview: "I think these stocks are seriously undervalued, and even if they rise by 10%, it does not mean that it is the right choice to sell them." According to the latest statistics from institutions, the all-line rise of UK bank stocks and the overall recovery trend of trading matching are the main driving forces for the outstanding performance of the UK fund he manages, helping the fund to defeat 86% of peers globally this year.

Lowen's extremely optimistic attitude towards the future market of the UK stock market contrasts sharply with the views of many Wall Street strategists. Wall Street strategists generally expect that the benchmark index of the UK stock market, the FTSE 100 index, will be about 4% lower than the current level by the end of this year.

In the political turmoil that lasted for many years after the 2016 Brexit referendum, the UK stock market has fallen behind its European counterparts and the continuously hitting new highs US stock market. The market chaos caused by the "mini budget" policy launched by former UK Prime Minister Liz Truss in September 2022 has further exacerbated this poor stock market performance, and the country will hold another election in July.

However, the positive side is that the UK has been improving both politically and economically. The UK economy, especially suffered from high inflation in recent years, is rebounding faster than expected, and the increase in the weight of cheaper and more value-oriented industries in the UK stock market is a blessing. The UK FTSE 100 index rose by 5.9% in 2024, close to the rise of the European benchmark stock index, the Stoxx 50 index, of 8.7%.

Market observers have become more optimistic, and strategists from HSBC recently upgraded the overall rating of UK stocks to "shareholding", stating that investors should increase their exposure to the region. Global asset management giant Schroders Plc has also upgraded its positive outlook for the UK stock market.

At the same time, amid the chaotic political situation in France, the total market value of the French stock market has shrunk significantly, and London has regained the crown of "Europe's largest stock market" from Paris.

As early as November 2022, the Brexit turmoil, coupled with the sustained heavy blow of high inflation to the British economy, once caused the British stock market to plummet, and the French stock market took advantage of the situation to seize the throne of the "largest stock market in Europe" from the British stock market. However, less than two years later, political turmoil in France dragged down the market value of the domestic stock market, causing it to return the title of "largest stock market in Europe" to the United Kingdom.

Due to the low prices and valuations, there has been a wave of large-scale mergers and acquisitions in the UK stock market, especially as the trading price of the MSCI UK index is about 40% lower than that of the MSCI World Index. According to the latest data compiled by institutions, so far in 2024, public mergers and acquisitions transactions for UK companies have reached as high as 37 billion US dollars, which includes pending and completed transactions, an increase of about 68% over the same period last year.

Luowen and his colleagues, Clive Beagles, recently joined the institutional ranks, including Centrica Plc and Morgan Advanced Materials Plc, after making a huge profit in bidding competitions such as Hipgnosis Songs Fund Ltd. (the fund company will be sold to Blackstone Group).

From a valuation perspective, compared with the same industry benchmarks of the US stock market, the stock prices and valuations of all industries in the UK are at a higher discount than normal levels. At the same time, the US Federal Reserve's official forecast of maintaining a high interest rate for a longer period of time also benefits the so-called "value stocks", and this type of stocks accounts for the majority of weight in the UK stock market. It is also worth noting that UK commodity companies and banks have announced the distribution of "unusual" dividends and launched unexpectedly large scale share buybacks, which may indicate a complete change in the fate of a long-performing poor stock market.

Shell and BP, the oil giants that account for a high weight in the UK stock market, plan to repurchase more than $5 billion in stocks. HSBC Holdings and Standard Chartered Bank recently announced share buyback plans. The extreme optimism of the listed companies' board of directors about share buybacks may continue to provide a strong "long-term bull market catalyst" for the British stock market, which also represents the vote of confidence cast by the board of directors that the company's operating scale can provide sufficient cash flow to pay for share buybacks to increase shareholder returns.

In addition, a series of large-scale corporate mergers and acquisitions and the Bank of England's more dovish interest rate comments have greatly boosted investors' interest in the relatively small UK stock market.