More than one game in town
As the host of three-quarters of the World Cup’s matches, the United States was in sharp focus recently at the epicentre of world football.
Markets have felt similar over recent years with the US equity market dwarfing other bourses and now representing close to two-thirds of global equities by market capitalisation[1] while spectators have been transfixed by its Mag Seven line-up of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
In contrast, UK equities now stand at a mere 3 per cent of global equities by market capitalisation.[2]
And the UK equity market has been notably short of cheerleaders given domestic and international selling, both retail and institutional, and reduced allocations to small and mid-caps, with domestic investors instead upping their exposure to international markets including the US.
But there seems to be a change in the run of play with the Mag Seven increasingly on the defensive. Some are now calling it the ‘Lag Seven’ after it its weakest month for over a year in June, as investors fretted about the heavy spending of the hyperscalers. Alphabet announced, and Meta is considering, equity raisings to finance this expenditure while bond issuance across the group has accelerated in 2026.
The sell off in the shares and bonds of SpaceX has also focused the minds of the tech investment community ahead of likely IPOs from Anthropic and OpenAI.
Nor are the share prices of the chipmakers having it their own way as markets have started to worry about valuations and a peak in earnings.
News that China’s Moonshot had released a new AI model further rattled the fans of the semis basket of Micron, SanDisk, AMD, Dell Technologies, Marvell Technology, Intel and Broadcom, described very recently and somewhat ominously as the ‘Parabolic Seven’.
As US Big Tech has been experiencing this loss of form, investors are increasingly realising that there are other games in town.
The UK equity market is a case in point where, according to Fidelity, ‘British shares are around a third cheaper than their US counterparts’.[3]
Supporting UK equities
It has been highly encouraging to see more UK investors loudly backing their home team as they point to these valuation attractions, particularly among those previously neglected small and mid-cap stocks.
These low valuations have prompted companies to buy back their own stock and have attracted bids from overseas trade buyers and private equity players.
Companies which have been bid for or have agreed takeovers this year include Beazley, DCC, easyJet, Intertek, Schroders, Segro and Tate & Lyle.
Only days ago, on the morning after England lost to Argentina, two well-known UK industrials announced recommended offers which could knock them out of the public markets.
Rotork, the actuator business, was bid for by ABB, the Swiss engineer, while Gooch & Housego, the photonics group, received an offer from Arlington Capital Partners, the US-based private equity firm.
These takeovers have left many investors concerned that the UK stock market is being ‘hollowed out’ through the takeover of companies at lower than their intrinsic value, leaving a much-reduced opportunity set of potential investments, aggravated by the fact that the value of takeover bids in 2026 is some 27 times greater than that of new listings.[4]
Nonetheless, this corporate buying clearly underscores the attractiveness of UK equities while there are also some promising indications of a strengthening IPO pipeline and enthusiasm from the buyside for new deals too.
In the meantime, a vigorous and wide-ranging policy discussion is underway about how to encourage long-term investors back into the UK stock market. This has encompassed tax, deregulation, and incentivisation policies with the Association of Investment Companies (AIC), for example, arguing that ‘abolishing stamp duty altogether would give the biggest financial return to the UK economy by encouraging more investors to buy UK equities and drive economic growth’. [5]
Winning at home and away
While this policy debate continues, investors in UK equities can access companies with strong prospects both at home and abroad.
There are many interesting opportunities in businesses exposed to the domestic economy, including the consumer cyclicals arena, but in the spirit of the World Cup, we thought we would look at the global opportunity for investors in UK equities where the international angle, not just in the United States or AI, is far greater than many realise.
The overseas exposure of the FTSE100 stands at around 70% of revenues with broad exposure across sectors, while, probably less appreciated, around half of the aggregate revenues of UK mid and small cap stocks also come from abroad.
These revenues are exposed to powerful dynamics such as reshoring, infrastructure (including digital) investment, electrification, urbanisation, emerging market industrialisation, defence, healthcare, and the energy transition.
It is for investors to do the detailed bottom-up work on the fundamentals and valuations of individual companies to decide which of these dynamics are relevant and, if so, whether they are reflected in prevailing stock prices.
Nonetheless, these structural growth drivers offer opportunities to many UK companies providing both the intellectual property and the ‘picks and shovels’ needed for these dynamics to play out.
Gooch & Housego and Rotork are good such examples, the former a technology business providing solutions to the industrial, life sciences and aerospace & defence sectors with 67 per cent of its revenues in 2025 from overseas[6] while Rotork provides mission-critical flow control solutions to the oil & gas, water & power, chemical and process industries, and had 94 per cent of its revenues abroad in 2025.[7]
Playing resources
The UK mining sector is a clear beneficiary of the minerals needs of many of the powerful dynamics mentioned earlier as well as of the growth in domestic consumption and trade flows in emerging market economies.
Investors in UK equities have several large cap miners available to them as well as numerous names within AIM, where Basic Resources is the largest ICB Supersector of the FTSE AIM All-Share with a weighting of just over 23 per cent. [8]
These miners bring exposure to assets located across the world including Australia, Canada, Africa and other resource‑rich regions through bulk commodities like iron ore; base and precious metals like copper and nickel, key in electrification and electric vehicles; gold, lithium and uranium, the latter an increasingly important resource as nuclear energy becomes part of the energy transition equation.
There is also an enormous opportunity for companies with access to rare earths given their strategic industry applications at a time when supply chain complexities, often geopolitical, are a major challenge.
The mining sector is a beneficiary too of advanced manufacturing including robotics where the growth in humanoid production looks set to drive a significant uplift in demand for titanium, magnets, lithium, graphite, cobalt, nickel and copper.
Investors in the UK can also pick from a bench of listed oil & gas companies offering exposure to conventional and unconventional oil, natural gas and liquids, all critical to global energy provision and energy security during this period of elevated geopolitical risk.
In addition, UK investors can gain exposure in London, through dual listings, to companies listed on the Australian Securities Exchange (ASX) or Toronto Stock Exchange (TSX).
And there are signs that the international opportunity set for UK investors could well expand with the London Stock Exchange noting recently in feedback on its ‘Shaping the Future of AIM’ discussion paper that it is looking for ways to reinvigorate the AIM Designated Market (ADM) route and encourage international companies to more efficiently gain admission to AIM.[9]
Strength in depth
A glance across the Atlantic shows us that the Russell 2000 index of smaller companies has been performing well recently, outpacing the S&P500 and Mag Seven so far in 2026.
This is encouraging for UK small and mid-caps which are similarly broadly-based and, like the Russell 2000, include both the enablers and beneficiaries of tech-driven productivity improvements.
Many UK corporates, including AIM‑quoted and other UK‑listed small and mid-caps, operate in sectors with genuine global reach, including specialist engineering and technology businesses in hardware and software.
These are substantial sectors with Industrials the largest in the Numis Smaller Companies plus AIM ex IT Index[10], accounting for close to a quarter of it. Meanwhile, the Industrials Goods and Services Supersector of the FTSE AIM All-Share stands at 14 per cent with Technology at around 8 per cent.[11]
Stocks in these and similar sectors also offer investors idiosyncratic fundamental and style characteristics which help in building diversified portfolios while investors who want more specialist exposures can also select from the universe of UK‑listed investment trusts.
So, just as we enjoyed watching the World Cup from afar, investors can also access global opportunities by investing in our very own home market of UK equities.
After the return of domestic football, we will look again at the UK equity market to consider the many interesting opportunities in businesses exposed to the domestic economy.
The content provided is for informational and educational purposes only. It does not constitute investment, financial, legal, regulatory, or tax advice. You should consult a professional FCA-regulated advisor about your particular circumstances.
[1] 63.60 per cent of MSCI ACWI Index (USD) as at June 30, 2026.
[2] 3.03 per cent of MSCI ACWI Index (USD) as at June 30, 2026.
[3] Why UK shares deserve a second look after Brexit, Fidelity International, June 25, 2026.
[4] Financial Times, July 8, 2026.
[5] AIC, July 15, 2026.
[6] Report and Accounts September 30, 2025.
[7] 2025 full year results released March 10, 2026.
[8] 23.4 per cent as at May 29, 2026.
[9] Discussion Paper Feedback Statement, Shaping the Future of AIM, November 2025.
[10] 23.43 per cent as at June 30, 2026.
[11] 14.39 per cent and 8.39 per cent respectively as at May 29, 2026.
