Could a successful Brexit bring mid caps back into focus?

Active M&A market

Despite the FTSE 100 delivering an almost 60% return over five years, the earnings of FTSE 100 companies have actually declined over that period.

In fact, we have seen zero or negative earnings growth for each of the past five years. However, 2017 looks set to be the year when investors should see a return to positive growth, with consensus currently expecting 20%. This is important because earnings growth provides support for the market's valuation. Forward earnings estimates for the FTSE 100 are 25% higher than they were at the time of the Brexit referendum. But, because the market has risen less than the earnings forecast, the multiple has contracted from around 16x to 14.5x. BoE keeps rates on hold; Ups inflation fore...