Investors looking to buy specific shares or to ensure the funds they invest in contain certain stocks can look to big banks for opportunities this year, according to star stockbroker Justin Urquhart Stewart
Mr Urquhart Stewart of Seven Investment Management (7IM) believes that improved stress tests makes banking institutions a good option in a market that is beginning to see the signs of increased volatility. “Stress tests in the past used to be a bit of a joke, now we've seen the Bank of England doing some pretty serious stress tests,” he says.
Banks, such as Lloyds and RBS are also on the “road to recovery”, according to Mr Urquhart Stewart. “You never know with RBS. Has all the poison come out? But Lloyds, well, I think they're actually looking significantly on the road to recovery with rising interest rates, and there's going to be a better dividend.”
International banks including HSBC are on Mr Urquhart Stewart’s radar too: “Of the international ones I could have Standard Chartered or HSBC. I think HSBC has been through a lot of bad news, and I think is now looking to recover quite well indeed.
“Standard Chartered's the smallest and slightly weaker one, so I will stick with HSBC, but, domestically, the choice is between RBS and Lloyds.”
‘We'll end up exactly where we started’
Asked where he thinks the FTSE 100 will head this year, Mr Urquhart Stewart offers a mixed message: “I think we are going to see some dramatic moves – sideways. I can see actually 2018 being in a position where we're going to see quite a bit of volatility as markets do go up and down
“Once we hit the volatility it will then continue for a while. But at the end of that, I suspect there's a very good chance we'll end up exactly where we started.
“So, I think it's going to be one of those years where you appreciate your dividends, enjoy your compounding, but actually end up at round about the same level as we started this year.”
Watch the full interview with Mr Urquhart Stewart below: