The truly rich don’t get that way without being well, truly savvy with their money. So when a bona fide billionaire makes a big bet on something it pays to take notice and possibly do something similar.
A case in point is billionaire Li Ka-Shing, one of the richest men in Asia, who recently decided to make a big bet on Britain. That’s half a world away.
Li Ka-Shing’s company, CK Asset Holding, has agreed to buy Greene King, a UK-based brewery based in the country’s southeast, for $5.5 billion, according to a recent report.
I guess that Li Ka-Shing smells a bargain in the same way that dogs smell food.
If he does, he wouldn’t be far wrong. UK investments, in general, are currently on sale in a big way. And that’s where individual investors might be able to find some bargains without needing $5.5 billion in the bank.
In short, UK stocks look like a screaming buy. Here’s why.
First, there is a cheap currency. One pound now fetches $1.22 versus more than $1.40 before the country’s decision to leave the European Union back in mid-2016. That means anyone with a pocket full of dollars can get a better deal than they did just a few years ago.
Second, British stocks are now absurdly cheap even when measured in pounds unless you believe that the United Kingdom is going to implode after decades as the most vibrant major economy in Europe. Stocks in the MSCI UK index now sell at 12.9 times next years earnings, according to data from Yardeni Research. That’s far cheaper than either the U.S. market or the stocks in Europe’s single currency area, which trade at forward price-earnings multiples of 15.3 and 13.5, respectively.
Better still, UK stocks offer plump dividends, more than double those in the U.S., on average. The FTSE 100 index, which tracks the largest listed companies, pays dividends that average more than 4% annually. Compare that to less than 2% for the S&P 500.
In other words, unless you believe that Britain’s economy craters very shortly, the stocks are trading at levels that would make it silly not to consider buying.
There are a slew of exchange-traded funds out there that give access to the UK market including the Invesco FTSE 100, which tracks the FTSE 100 index. That and similar should be available through brokers that offer foreign/non-U.S. stocks.