Source: Sharecast
"As the world stands today, there is one clear recommendation: Buy UK," the broker said.
Financial markets across the globe on Monday were digested Donald Trump’s latest trade war rhetoric, after the US President said on Saturday that he was planning to impose 30% levies on imports from the European Union and Mexico from 1 August.
The figure was far more than what many analysts – and EU nations – had expected, following the 10% tariff secured by the UK in a trade deal announced last month.
"By now, investors know the drill: A lot will change between today and 1 August, and the numbers thrown around at the moment are so high that they are ridiculous," Panmure Liberum said in a research note. "However, while Trump cannot be taken literally, we think he still needs to be taken seriously. We think that the EU will face many obstacles to getting a trade deal over the line by the end of this month."
As for UK businesses, Panmure Liberum believes that, given trade uncertainty is much lower than for their European counterparts, stocks should be "much more resilient in the coming weeks".
What's more, the broker also sees a large arbitrage opportunities for European companies diverting exports to the US via the UK, which will result in higher foreign direct investments in manufacturing sites and warehouses in the UK over the next three to five years.
"Because the UK is subject to 10% tariffs and tariffs for exports from the EU to the UK are typically 10%, EU manufacturers could ship goods from the EU to the UK, slightly alter them in the UK to turn them into 'Made in the UK' goods, and then ship them to the US," the broker said.
