Blog: The British shares on a 50pc ‘Brexit’ discount – for a limited time only –

Investors can snap up a bargain by buying British shares at marked-down prices compared with international rivals, simply because they are listed in London rather than New York, Zurich or Milan.

Taking the price-to-earnings ratio for 2020, which measures how cheap shares are relative to their earnings last year, some giant British stocks trade at half the valuation of global peers. Investors have shunned London-listed shares because of uncertainty caused by Brexit and the economic damage from the Covid-19 pandemic.

But this discount is unjustified and investors should act now to bag bargains before they disappear, according to fund managers.

Richard Colwell, of investment manager Columbia Threadneedle, said it was the best opportunity in a decade to shop for sales.

“Big global British companies are at huge discounts relative to competitors around the world, reflecting recent political uncertainty and the economic hit from the pandemic. This is a theme across multiple business sectors,” he said.

For example, BT has a p/e ratio of six, compared with 14 for German telecoms group Deutsche Telekom and 21 for Dutch group KPN. Unilever, the consumer goods giant that owns brands such as Marmite and Dove, trades at 20, versus 25 for Nestlé, a 20pc discount. GlaxoSmithKline has a p/e of 11, versus 23 for Danish pharmaceutical company Novo Nordisk or 16 for Swiss group Novartis.

Tobacco companies feature some of the biggest discounts. British firm Imperial Brands, which owns Golden Virginia rolling tobacco, trades at a p/e of just 6, compared with 16 for American rival Philip Morris International.

“British companies that do business internationally would be 40pc more expensive if they were listed in America or Europe. Most of these companies source the majority of their revenue from overseas, so the effect of a domestic economic slowdown is limited,” said Mr Colwell.

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