City star predicts positive year for London markets

Feel-good factor should return to the economy, one of the UK's leading fund managers forecasts

London's stock markets can build on the positive start they have made to this year despite continued upheaval in the eurozone, one of Britain's most influential fund managers has claimed.

Robert Churchlow, head of UK Equities at Legal & General Investment Management, said an upturn in the housing sector was likely to boost consumer spending in the UK over the next few months. He praised measures taken by Chancellor George Osborne in last month's Budget and predicted the "feel-good factor" could creep back into the economy.

"We believe there are significant structural problems in the eurozone and think things could end badly. Trying to predict exactly how and when is the difficult bit, yet the markets seem to have taken the problems in Cyprus in their stride.

"In the US, it looks as though we may see a self-sustained recovery. The signals out of China are mixed but we believe things will be alright there too. These are the real drivers to global growth and as long as Europe doesn't blow up to the extent that it ruins the US recovery, then equity markets can make further progress."

LGIM is the biggest investor in the FTSE 100 and currently has global assets under management of £406bn. At the start of the year, the company predicted the FTSE 100 would rise 8 per cent to 6,400 points – a milestone it has already passed, settling at 6411.74 on Thursday.

Mr Churchlow was particularly bullish on the housing market, which he said would benefit from measures such as the Help to Buy scheme in the Budget, which the Chancellor estimates would fund £130bn of new mortgages over three years

"The Government has taken steps to boost the housing market, which should in turn support consumer spending," he said, adding: "If you can get consumers spending and get house prices going up then the 'feel-good factor' will creep back into the country. On the housebuilders we can see the profitability improving as the companies increasingly build on land bought in recent years on attractive margins.

"The measures which the Government is putting through are also helping and the detail in the Budget was a positive surprise. It was very helpful and you've seen housebuilders' shares react positively to that. Investors are also starting to believe that house prices can start to move up. We also believe that an upturn in the housing sector will benefit some retailers, particularly those exposed to an uptick in housing transactions."

Churchlow also welcomed the recovery in London's IPO market in the wake of positive stock market debuts from Countrywide, Crest Nicholson and Esure. He said the outlook for IPOs looked better this year.

"If you look at the quality of the companies coming to the market this year, it's been pleasing. For example, Crest Nicholson is one of the highest quality housebuilders and Esure has a strong market position with strong management. Both were sensibly priced as their share prices in the aftermarket have shown.

"Pricing something attractively benefits everybody. The company benefits from a rising share price, investors will have more willingness to look at future IPOs and the banks benefit from higher activity levels. A successful IPO also makes it easier for vendors to reduce holdings further in the aftermarket as we saw this year with Direct Line."

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before