There can be no doubt the protracted Brexit debacle in the UK is casting a long shadow over its investment markets.
This is hardly surprising as investors tend not to like significant uncertainty.
Politics is notoriously difficult to predict and as a result, assets that appear to be at risk of being impacted by whatever flavour of Brexit we end up with, are being penalised from a valuation perspective.
The question for investors today is how much bad news is already affecting the price and whether it might be overdone.
If it is, then markets may have overreacted to the negativity, meaning there may be a valuation opportunity for judicious investors to exploit.
UK growth assets are, arguably, attractively priced. The argument in favour of UK large-cap stocks, for example, is that they derive more than two thirds of their revenue from overseas.
As a result, they should be relatively ‘Brexit proof' providing their management have good plans in place to deal with possible short-term issues caused by the upheaval that a no-deal Brexit could portend.
The valuation argument for UK large cap is stark - a host of global companies trading at a 20% discount on the basis of their forward P/E ratio, compared to the broader global stockmarket.
These discounts are attractive, yet possibly overdone.
The negative sentiment towards UK growth assets that are arguably more sensitive to the state of the UK economy such as UK mid-cap stocks and UK property investments, probably needs to be tempered somewhat.
Half of UK mid-cap revenue comes from overseas, so they are not as domestically orientated as many contend.
Turning from valuation multiples to dividend yields provides an interesting picture.
Large caps presently yield 4.8% and mid caps yield 4.5%. These are attractive income levels, especially when compared to yields available in credit markets.
James Klempster is director of investment management at Momentum Global Investment Management
• UK growth assets are under a pall thanks to Brexit, and are discounted as a result
• The UK large- and mid-cap markets derive enough of their revenue from overseas to be less sensitive to Brexit than many expect
• UK growth assets are ultimately reliant on the UK economy and activity is on hold pending the Brexit outcome
• While the UK market is a little cheap compared to the global stockmarket, a discount of 20% is arguably not enough given the idiosyncratic risk investors in the UK take on today, especially if from abroad