As much at the revenue attribution of the FTSE specifically is weighted to international drivers, the interplay of factors should be considered when looking at the likely direction of the medium-term travel in the price of assets. The heavy weighting that housing has in the UK is key, an owner-occupier market beyond many others in Europe. The elevated fiscal frictional costs of moving, the rising cost of borrowing and in time the drift towards more careful and considerate lending criteria – tightening credit rationing, will mean the extreme level of price/household income multiples that currently prevail will fall. This might be more of a stall than a crash, but it will weigh on household and therefor broader investor sentiment. The ‘extend and pretend’ approach on lending and policy around housing debt will feedback into more prudent investor sentiment. I do not suggest a further and full move from growth to value but the hunt for cheap and underwritten income will be a feature – lending itself to the UK market on a relative basis.

Funding in all its forms, both private and public (debt and equity) will become more circumspect and require better terms. The rush for innovative technology related and unrelated to the energy transition will need nearer-term and more material revenue and profit visibility and better down-side protection. Real ESG considerations will grow in importance, but more speculative situations will struggle. Given the raft of more traditional energy prospects with lowly valuations in the listed sphere, well-constructed and presented opportunities should receive backing.

The near-term, after a brutal listed stock multiple de-rating, will be about marrying up the degree of ensuing downgrades with valuations. The complicating factor will be the way in which this feeds back into private valuations as the pass the parcel VC/PE game comes to an abrupt stop – down-valuations in many areas will become the norm and unwinding exposure will be problematic. This is a natural and required process but one that will not be casualty free. The corollary will be that where there is a strong fundamental case for investment, presented correctly – there will be many tremendous commercial opportunities. The cycle of business delinquency and rebirth needs to run its course. After such a prolonged period of benign conditions, it will just be a tricky for the period of change but one that should see a stronger outcome when the sifting process concludes.

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