International investors taking advantage of record-low pound

International investors taking advantage of record-low pound

As the FTSE 100 hits an all-time high as buyers look to take advantage during currency window of opportunity. But is property the stronger investment?

Summary:

  • A weakened pound is driving investor sentiment in the UK’s primary financial markets
  • The FTSE 100 hit an all-time high on October 11th as the index’s overseas investors continue to see their returns grow
  • But with equity markets in Britain and across the globe plagued by volatility all year, should more investors look to low-correlation assets such as UK property when looking to capitalise on the fall in the pound?

As the pound falls, investor interest spikes.

Last week (October 4th), the pound dropped to a 31-year low against the dollar, prompted by the news that Prime Minister Theresa May will invoke Article 50 and begin the process of withdrawing the UK from the European Union.

And investors have been quick to make their move.

This has culminated in the FTSE 100, Britain’s benchmark index, hitting an all-time high on October 11th, trading at 7,129.83. Though it fell slightly to miss out on an all-time closing high, the message was clear – foreign investors are taking advantage.

The FTSE 100 has been one of the main beneficiaries of a falling pound, with the vast majority of the blue-chip companies listed on the index generating most of their revenues overseas.

But while there’s undoubtedly never been a better time to secure assets in the UK, should investors be making equities their priority during a year which has seen wide-spread volatility in markets from London to Shanghai?

Many investors are already using the currency opportunity to add high-returning UK real estate to their portfolios. Some construction companies have registered a 20% increase in interest for property following the vote for Brexit, while house price sentiment has recorded its largest surge for seven years.

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