Telcos and energy set to come under greater scrutiny regardless of UK election result

Aviva Investors' Balfour looks at UK equities

UK equity indices continue to advance in 2017, as the valuation pull of firmer international stockmarkets outweighs the twin negative impulses of ongoing domestic political uncertainty and a firmer pound.

Despite the political uncertainty, the FTSE 250 index, whose constituent companies are far more reliant on their home economy than their large-cap peers, has spearheaded the rally in UK stock prices. In the first four months of the year it returned 9.5%, comfortably surpassing the 2.3% return generated by the FTSE 100 index of Britain's biggest companies. That comparative outperformance is partly explained by a stronger pound, since the multinationals which dominate the blue-chip FTSE 100 earn a large chunk of their revenues abroad. A stronger pound depresses their value. With Prim...