Buxton: Corporate profits are 'bright spot' amid macro headwinds

ON UK GROWTH

Schroders' Richard Buxton believes UK equity market valuations do not reflect the real strength of businesses in a challenging macroeconomic environment.

The economic recovery in the UK continues to be fairly anaemic and, with further macroeconomic headwinds expected in 2011, investors should be braced for a period of continued volatility and increased opportunity. Heightened uncertainty of recent times has left investors more sensitive to short-term news. However, amid the volatility of 2010, there was one constant – improving corporate profits, which have been the bright spot of the recovery. The restructuring businesses engaged in during the early stages of the recession mean many firms enjoy improved balance sheets and better cash gen...