Simon Gergel is the CIO of Allianz’s UK equities business and manages The Merchants Trust. Given his UK focus, we get his view on the UK market, which was one of the few that delivered positive returns in 2022. Given the outlook and valuations (more detail in our last note), he remains positive for 2023. We explore this with reference to the UK housebuilders sector, which sold off after the 2022 mini-budget. Simon notes the long-term structural housing shortage, the ability of costs to eventually realign to lower volumes, the difficulty of new entrants to come into the volume market and valuations remaining attractive against book value (this view is also reinforced in our recent thematic). Simon illustrates the qualities he looks for in a company by discussing Pets at Home (PETS.L, market capitalisation £1.87bn), where the attraction comes from the company’s vet business and the long-term trend of pet humanisation spending, as well as responding to my question of what stopped him having conviction in AstraZeneca (AZN.L, market capitalisation £167bn).
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