Why is the UK FTSE so low?

sevenhills

Just comparing different countries stock markets, which is not something I know much about.

UK FTSE all share is at the same level is was at in 2018

The USA stock market was at 28,11 in 2018 and is now at 45,526

The German DAX40 was at 11,715 in 2018 and is now at 15,205

So although many have had good profits this year from the FTSE, it is low compared to the USA and Germany. Have other countries seen good increases post 2018?

The UK has suffered more than some countries due to COVID, but are there more issues?

https://www.marketwatch.com/investing/index/dwcf

https://www.boerse-frankfurt.de/index/dax

https://www.google.com/search?client=firefox-b-d&q=ftse+all+share

eskbanker

There will be a variety of reasons behind lower UK performance, ranging from our withdrawal from a large trading bloc through to the number of UK companies that yield higher dividends than foreign peers, which distorts raw index performance but levels the playing field more when comparing on a total return basis.

The comparison isn't necessarily about poor UK performance but higher than average US growth, with its tech sector booming, especially during Covid, but it's only to be expected that markets will move at different rates, which is why it's important to diversify, unless you have reason to believe that you can pick the winners in advance....

RolandFlagg

Because it's full of old industries. It's less than 2% tech.

george4064

Tick ‘dividends re-invested’ and the FTSE will show a much better performance, albeit still lagging behind other regions.

Thrugelmir

There's been a negative mantra towards UK stocks generally for a while. 

MX5huggy

Good UK companies get hoovered up by private equity or foreign ownership.

I’m sure this is gross generalisation but ARM, Morrisons, etc.

coastline

When you add in the dividends it's a different story but in general it has underperformed in recent years.

Ega6qmGXgAArfoQ (634×451) (twimg.com)

Try stretching the chart back to 5 years, 10 years then set to January 1986.

Chart Tool | Trustnet

It's never traded much above P/E of 15 as it's dominated by heavyweights which are slow growing.

1620982432961.png (751×437) (c-dn.net)

Although the likes of the SP 500 trade on a forward P/E of 20 many of it's constituents are similar stocks to FTSE stocks and they trade around 15. You would expect the FTSE stocks to trade at those valuations.

From headwinds to tailwinds – a reversal in fortune for the FTSE 100? | FTSE Russell

talexuser

The bounce back of the UK stockmarket is beginning to sound like the "interest rates will rise soon" and the "value rotation is just around the corner", waiting the the stopped clock to eventually get to the right time :-)

Thrugelmir

talexuser said:

The bounce back of the UK stockmarket is beginning to sound like the "interest rates will rise soon" and the "value rotation is just around the corner", waiting the the stopped clock to eventually get to the right time :-)

Hence my mantra comment. 

mumf

 Because the world runs on diesel,but Boris and co. think we can do it on wind and sunshine.

[Deleted User]

mumf said:

 Because the world runs on diesel,but Boris and co. think we can do it on wind and sunshine.

World produced 720 TWh of solar (estimated by IEA) in 2019, 260GW added capacity in 2020 alone and new renewable sources made up 80% of added capacity in 2020 with the amount of fossil fuel capacity added falling annually. China and the US continue to add loads of renewable fuel. It won't replace gas/oil yet but it's getting there with new turbine tech being launched every year - a Danish firm is trialling a 15MW turbine and a Chinese firm are testing a 16MW one