U.K. Stocks Lag Peers Even After Best Year Since Brexit Vote

(Bloomberg) --

The U.K.'s FTSE 100 Index hasn't rallied this much in a year since the Brexit vote of 2016. It's still falling well short of most European peers.

The measure has climbed 14% in 2021, about half the gains of its French, Swedish and Dutch counterparts. Only Spain has fared worse among major European markets. 

The FTSE 100 has an opportunity to catch up with European peers in 2022, for which earnings surprises will be key rather than revaluation, Bloomberg Intelligence strategists say.

While the British benchmark got a boost from megacaps such as beverage maker Diageo Plc, drugmakers and oil giants this year, the unraveling of the lockdown trade hurt companies such as online grocer Ocado Group Plc. Unilever Plc's slide was also a drag as the company battled inflation.

The midcap FTSE 250 Index has also performed in line with the bigger gauge, up about 15% for the year.

Back in 2016, the exporter-heavy FTSE 100 rallied on the back of a sharp slump in the pound following the Brexit vote. But the U.K. stock market lost investor favor in the following years, struggling to attract fund flows.

It has fared better as a place for companies to list, holding on to its position as Europe's top venue in 2021, a status that may be tested as rivals close in.

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