L&G positive on year ahead for markets

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,” he said. “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 all right 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 has global assets under management of £406 billion. At the start of the year, it 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.

“The Government has taken steps to boost the housing market, which should in turn support consumer spending,” he said. “If you can get consumers spending and get house prices going up then the ‘feel-good factor’ will creep back into the country.”