FT Alphaville " The British economy is GREAT The British government ran a campaign during the Olympics promoting how GREAT Great Britain is. It wasn't the most subtle of messages, but a fitting promo for The Bearded One. Most bases were have covered, from heritage to innovation to shopping. The one thing they missed is the economy. Understandable, you might say, but there is a view that, compared to other developed economies, it may be about to surprise to the upside. That's the analysis of the global equity strategy team at Credit Suisse, who give four reasons why the UK is great. Relatively speaking, of course... let's not get carried away. Macro indicators are looking healthier than those for the eurozone and the UK. Even housing is stabilising: The BoE is much more dovish than its counterparts. The UK is experiencing a smaller fiscal drag. Fiscal tightening is projected to be 0.3 per cent of GDP in 2012/13 according to the latest Budget - lower than in the US or eurozone: Sterling is a "cheap safe haven relative to the rest of non Euro Europe," according to the CS team, pointing to this chart for evidence: Credit Suisse also point out that the FTSE100 is trading at a 12 per cent PE discount to global markets, and over 80 per cent of UK sectors trade at a discount to global sectors. In terms of sectors, they favour investing in UK REITs: We believe investors should focus on cheap real assets and companies that price off RPI/CPI - and UK REITs involve both. And recommend piling into homebuilders: QE favours real asset plays. The outlook for UK housing is not as bleak as some investors believe. We therefore continue to be overweight the home builders. Three main reasons: shortage of supply in the housing market, decent valuations and robust balance sheets. They cite one "slight negative" regarding the UK, though (emphasis ours): The UK is a defensive market, tending to outperform when lead indicators weaken. This is primarily due to the sector make-up of the UK index, which has a greater proportion of the index in defensive sectors. UK EPS has the lowest beta with global IP of the major regions. Earnings revisions have been poor. More on this in the usual place. Related links: The BoE on Britain's productivity puzzle - FT Alphaville Are UK companies hoarding labour? - FT Alphaville This entry was posted by Masa Serdarevic on Tuesday, September 25th, 2012 at 17:28 and is filed under Uncategorised. Tagged with britain, credit suisse.