The UK is 'an interesting investment' right now: UBS Global Wealth Management

That’s going to steer on these markets. Bring in Adrian Zirka, now Head of Global Asset Allocation and Co Head, Global Investment Management, APAC at UBS Global Wealth Management. Adrian, always great to catch up with you. When you look at what we saw from the softer payrolls number on Friday in the US, does that in any way tell you that perhaps the US exceptionalism narrative is starting to look a little bit overextended now And where then does it leave the case for US equities? Hello. Overall, the US economy is still quite strong. If you look at some of the indicators, but combining with ISM indicators, we saw the non farm payrolls, we clearly can start to see a slowdown and I think it’s a welcome slowdown. It should translate into lower inflation. Now the inflation print for the ISM has been still quite strong. We actually do think that a lot of these components are idiosyncratic on a higher level and over the next couple of months will drift lower. So we remain in the camp. The Fed will be able to cut latest by September 1st, 1st interest rate cut that will come through and given the sensitivity of the market and the overly focused market on rate cuts, I think that should be positive for equities globally particular also for fixed income as well. But the US isn’t the only game in town is there? And you just recently upgraded some parts of the UAUK equity market, if not the entire equity market. I correct my myself what what looks compelling there, Adrian and can you extend that thesis to the rest of Europe or do you want to be or should we be cautious on Continental Europe? Well, I think the interesting part is we have seen for a quite a period a very concentrated rally through the US and through some of these companies which everybody’s talking about. Now the markets start to differentiate and evaluation of some of these other companies are expensive. But what we also can see is that earnings starts to broaden to other sectors, other countries including the energy sector for example, more cyclical sector which start to benefit. And so given the low valuation of these companies and now we start to see earnings upgrade coming through and relatively good earning seasons as well, we do think that the market becomes a bit more differentiated and starts to snap up some of these names. So if you look at the UK for example, over the last couple of weeks, actually I’ve done better than the US market and many, many tech related companies. And we think there’s still a bargain and at this point something to look into. We also think we get interest rate cuts earlier than in the US that should support the domestic market. The currency has been a bit more on the weaker side, which of course benefits the offshore market. And therefore I do think the UK is an interesting investment at this point. And I’m probably relates a little bit to the global view as well and probably pan European view that some of the sectors, particular lacking sectors are worth to have a look at and to buy into. But you will not buy the whole European market because some actually have done already quite well if you compare Europe versus the UK. So UK clearly cheaper earnings growth is coming through and we get earlier monetary policy support.