He remains overweight the UK relative to Europe but not relative to Japan and America.
Peters said the big question around the UK is the possible impact of rising a rising base rate and UK pound. Peters notes that from a historical standpoint a stronger pound has typically been accompanied by price and EPS underperformance in UK equities relative to other regions however, this may not necessarily be the case this time.
According to Peters there are ‘persuasive counter-arguments to the UK bears’ which point towards a high oil price and the fact that the market looks over-owned. The main one being that it is plausible the pound will not strengthen further as it is already nearly 20% overvalued in PPP terms.
From a valuation perspective Peters said it is also notable the UK is trading at historical lows relative to Europe, with 2007 the only point in the last 10 years it has been surpassed.
Despite this seemingly bullish outlook on the UK it is not enough for Peters to consider the UK a better bet than Japan and the US yet however, although it is edging further ahead of Europe.
