Miton UK MicroCap Trust plc (LON:MINI) has announced its Factsheet for November 2023:
During globalisation, the share prices of US companies tended to appreciate relatively rapidly. Globalisation is a term used to describe how trade and technology have made the world into a more connected and interdependent place.
When patterns such as these persist for decades, they become embedded in the investment decisions of large institutional investors. Investors may keep taking investment capital out of stock markets (equity markets) that have performed less well, such as the UK and invest in those that have shown strong positive momentum such as the US stock market.
Patterns like this eventually leads to a mismatch in market valuations as with the US vs the UK company share markets currently.
Over the last three years, as international trading relations have broken down, the globalisation market trends have been less pronounced. With larger UK companies standing on relatively low valuations, global investors have started investing in them again which has boosted their returns.
During November, investors became more enthusiastic because economic data suggested that a global recession may be less likely next year, with inflationary pressures continuing to lessen. Markets and investors are seemingly looking forward to 2024 and potential interest rate cuts. As a result, the valuations of government bonds and global stock markets rose during November.
If there were to be a general economic recovery next year, then we would also expect a broad stock market recovery, with the most overlooked stocks potentially moving strongly. As the Miton UK MicroCap Trust portfolio also includes numerous AIM (Alternative Investment Market) listed stocks that have already heavily underperformed over the last two and half years, we remain very upbeat given the Trusts current investment positions.
AIM is London’s stock exchange market for small and medium sized companies.
