French banking giant urges clients to back Britain and move cash out of Eurozone in big boost for the City

A French banking giant has told its customers to withdraw cash from the euro zone and support Britain – a valuable boost for the city.

The investment bank BNP Paribas urged its customers to invest their money in British stocks.

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The United Kingdom is considered an attractive investment due to the cheap pound, its combination of industries and a better-than-expected development of the British economy. The Telegraph Reports.

The bank’s analysts have shifted their preferred allocation from the euro zone to the UK and are encouraging investors to follow their advice and put their money into companies listed on the UK stock exchange.

The move is expected to provide a much-needed boost to the beleaguered London stock market, which is plagued by fears of losing its position and influence due to the exodus of listed companies.

Viktor Hjort, head of credit research at the bank, said: “The outlook for UK equities is not bad at all. The FTSE is a securities market. There is a lot of energy and materials and a lot of banks. You can look at the price of oil to see where the energy is going.”

Oil prices have risen by around a quarter since late June and hit a 10-month high this week as Saudi Arabia and Russia tightened supply to counter lower demand.

The rising prices will provide a boost to both BP and Shell, which together account for around 13 percent of the FTSE 100’s value.

Interest rates have also risen at their fastest rate since the 1980s, causing banks’ profit margins to rise.

Financials account for almost a fifth of the value of the FTSE 100.

Hjort said: “We believe that such an environment is generally quite favorable for value investing, as opposed to growth investing. “The UK is a pretty good example of this.”

What also speaks for Great Britain is that “the valuations are simply cheaper,” said Hjort.

Earlier this summer, investment banker JP Morgan said UK-listed companies were the cheapest in the world due to the “very gloomy” sentiment towards the UK.

Forecasts suggest that the British economy will do better than the Eurozone.

Economists at BNP Paribas expect the UK to slip into a mild recession in the first half of next year, but believe the economy has proved far more resilient than expected.

Meanwhile, experts believe the euro zone is at risk of another recession after quarterly growth figures were revised downwards last week.

The BNP’s chief economist for Europe, Paul Hollingsworth, said there had been “a lot of pessimism” about Britain, particularly after Liz Truss’ term as prime minister.

He said: “There has been a lot of caution around UK assets. A lot has developed since then. As we have seen, the economy performed much better than expected.

“When we talk to people, they agree that there will be some weakness ahead, but there will not be a severe downturn, also because some of the underlying resilience is there.”

BNP Paribas is one of Europe’s largest banks with assets worth more than £2.1 trillion.

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