BlackRock bullish on U.K. stocks after elections, Japan stocks are top play

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BlackRock Investment Institute said in a mid-year outlook report that the prospect of higher-for-longer interest rates made inflation-linked bonds attractive

The BlackRock Investment Institute said on Tuesday that recent parliamentary elections in Britain had made valuation of U.K. equities attractive, while Japan stocks remained its favoured equity investment play.

“Valuation is very compelling … and given the perceived political stability leading to better sentiment, we think there’s a tactical opportunity for U.K. equities,” Wei Li, global chief investment strategist at BlackRock, said on Tuesday. With regards to U.S. government debt ahead of the presidential election, long-term debt prices are not sufficiently reflective of the prospect of widening U.S. fiscal deficits, prompting BlackRock’s preference for short– to medium-dated Treasuries, said Li.

“Both of these candidates are not really talking about plans that bring down fiscal deficits. They spend in different ways but they’re both looking to spend,” she said.

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