Will British stocks bounce back after Covid?

‘Unloved’ is an adjective often applied to British shares in recent years. A more appropriate description might be ‘abandoned, with half a dozen kids and the rent unpaid’. Since referendum day in June 2016 the FTSE100 index has grown by 10 per cent. Over the same period the Hang Seng is up 42 per cent, the DAX up 44 per cent, the Dow Jones up 88 per cent and the Nasdaq up 184 per cent. The FTSE100’s longstanding underperformance goes back far further, though, than that. It is still lower than it was on the last day of the last century – although there has been substantial growth in the midcap stocks which make up the FTSE250.

Yet some seem to think that the ship has finally come in for UK shares. In recent months, money has begin to flow back into UK markets. And now several investment trusts have borrowed heavily to invest in more UK shares, convinced that the trend will continue – that the UK is the place to look for value shares.