(Adds background, details from note)
By Thyagaraju Adinarayan
LONDON, Sept 13 (Reuters) - Credit Suisse has turned bullish
on UK stocks, especially those with international exposure, as
the chances of the country crashing out of the European Union
fall and some equities look cheap compared with foreign
counterparts, it said on Friday.
Credit Suisse is the first major bank to change its view on
UK equities amid rising hopes the country will avoid a no-deal
Brexit on Oct. 31 after Prime Minister Boris Johnson's hardline
stance suffered a series of defeats in recent weeks.
Since Johnson won the top job in July, Britain's Brexit
crisis has spun more furiously, leaving investors and allies
bewildered by an array of decisions that have pushed the once
stable political system to its limits. UK equities have been widely shunned by investors since the
country vote to leave the trading bloc in 2016.
As recently as three weeks ago, the Swiss bank said it was
neutral on UK equities because it needed more visibility over
Brexit. That's now changed due to the reduced likelihood of a
no-deal Brexit.
"Given the most recent developments (...), we believe that
investors should now be overweight of the UK, but more
importantly in USD terms and still selectively," its analysts
said.
The note came as sterling jumped to a seven-week high
against the dollar as investors cut their sterling short
positions on the receding risks of Britain leaving the European
Union without a negotiated arrangement. GBP/ The Swiss bank now expects the UK blue-chip index FTSE 100
.FTSE to touch 7,600 points by mid-2020, a 3.5% gain from
current levels.
"We would buy UK international earners in dollar terms that
are cheap versus their peer group," Credit Suisse analysts said.
In dollar terms, the FTSE 100 is the only major index to
have fallen since Brexit, while rest of the world has seen
double-digit percentage gains.
Credit Suisse said Johnson Matthey JMAT.L , Elementis
ELM.L , Rentokil RTO.L , Relx REL.L and British American
Tobacco BATS.L were some of the attractive names with
international exposure.
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UK stocks undervalued https://tmsnrt.rs/2ZZhWlo
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