The same, sadly, is true of financial markets. Whatever your political views, it is impossible to ignore the effect that three years of Brexit uncertainty has had on the UK stock market. Although not entirely responsible, the weakness of the pound has meant that UK assets have become doubly cheap and falling like dominos to takeovers by foreign buyers. As John Baron explores on page 30, the UK remains the world’s cheapest major market.
He’s adding to his UK exposure in the belief that poor sentiment towards UK assets has run far ahead of the reality on the ground – contrarian sentiment clearly shared by those foreign predators snapping up UK businesses, among them the world’s 30th richest man, Li Ka-Shing, buyer of Greene King. The Hong Kong-based investor’s ability to read and time markets is the stuff of legend, so he’s worth paying attention to – especially now when the world seems a dark place for investors, as it must have done in Hong Kong in the turbulence of 1967 when he made a contrarian bet on the island’s real estate and his first great fortune.
Mr Li’s enormous wealth has been built not just on bravery and good timing, but – like Warren Buffett – on wisdom that he has maintained throughout his long investing career. At the heart of this is caution: “Our principal policy is never to take financial risk,” he once said, a comforting stance for those now tempted to follow his lead into contrarian UK plays. To eliminate those risks he advocates hoovering up knowledge, embracing disruption and eliminating emotions which he says lead to hasty decisions and unexpected mistakes. “I do not get overly optimistic when the market is good, nor overly pessimistic when the market is down” is a pearl of wisdom all investors should heed.
Meanwhile, one unloved asset attracting barely any investor interest is Marks and Spencer, which is set to drop out of the FTSE 100 this week, having been an ever-present constituent in the index’s 35-year history. The retail bellwether’s progress in addressing the rise of internet retail has been glacial – an analogy that also holds good when we consider the general erosion of its value in the heat of e-commerce and rise of fast-fashion. M&S itself would do well to turn to the wisdom of Mr Li, who once said that “to trade is to fill the needs of the people” – if it is to ever regain former glories, it must, like Zara or Primark, start giving customers what they want.
