The UK used to be a super power ruling many countries of the world. Nowadays UK has become an also ran country. The country is not a leader in technology. In defense, it is generally considered a poodle of the US. Economically the country has bogged down in the Brexit morass for the past few years. Similar to the Greek sovereign debt crisis that lasted many years the current Brexit saga continues like a cruel British joke with no end in sight. In some ways, the country has become the laughing stock of the world.

In the latest development, UK is set for a new election on December 12th. From an article in the BBC:

The UK is set to go to the polls on 12 December after MPs backed Boris Johnson’s call for an election following months of Brexit deadlock.

By a margin of 438 votes to 20, the House of Commons approved legislation paving the way for the first December election since 1923.

The bill is still to be approved by the Lords but could become law by the end of the week.

If that happens, there will be a five-week campaign up to polling day.

The prime minister has said the public must be “given a choice” over the future of Brexit and the country.

Mr Johnson hopes the election will give him a fresh mandate for his Brexit deal and break the current Parliamentary deadlock, which has led to the UK’s exit being further delayed to 31 January.

Source: UK set for 12 December general election after MPs’ vote, The BBC

From an equity market performance perspective, British stocks have lagged all the other developed markets over the past decade as the following chart shows:

Click to enlarge

Source: FTSE 100 loses earnings momentum again by Russ Mould, Shares Magazine

An excerpt from the above piece:

PRICE MUST BE RIGHT

The good news is that it is possible to make a case for UK equities being cheap, especially after a period of underperformance on the global stage that pre-dates the summer 2016 EU referendum vote by some distance. Over the past 10 years, the UK stock market, as benchmarked by the FTSE All-Share has provided a total return in sterling terms of 104%.

That lags not just the rip-roaring US equity market but Japan, Asia and even Western Europe as well (with sterling’s decline playing part). UK equities have outperformed only emerging markets, not developed ones.

As a result of this moderate showing, it can be said that UK equities look cheap relative to their international peers and to their own history on just 12.7 times forward earnings for 2020, with a dividend yield of 4.6%.

That dividend yield in particular may catch the eye of income-seekers, as it is the highest figure on offer from any of the eight major geographic equity market options and represents a premium of more than four hundred basis points (or four percentage points) relative to the benchmark 10-year Gilt yield.

Investors need to ask themselves: are the earnings and dividend forecasts which underpin those tempting valuation metrics any good?

Global investors have avoided the British market like the plague due to uncertainty over Brexit. it remains to be seen if these investors turn their attention back to the UK anytime soon.

Related ETF:

• iShares MSCI United Kingdom Index (EWU)

Disclosure: No positions