Standard Life boss says equities 'reasonably valued' adding to FTSE gloom

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Don't expect the FTSE 100 to rally again until investors see signs of a global recovery and companies start spending cash on their balance sheets, one of the UK’s leading fund managers has warned.

Keith Skeoch, head of Standard Life Investments, which has £240 billion under management, said the London market will continue to be sluggish in the lead-up to Christmas, with fears over Europe’s economy among the factors dragging it down almost 5 per cent since the end of the year.

“I think equities look reasonably valued and they may edge up before the end of the year,” he said. “However, we need to see evidence of growth outside the UK and US and cash sitting on company balance sheets being put to use.

“We’re quite a way from getting visibility on both of these issues though.”

Skeoch’s warning comes ahead of a meeting of the United States Federal Reserve today at which it is expected to end its quantitative easing programme despite continued market volatility.

This failed to hit US markets overnight as the Dow Jones broke through the 17,000-points barrier again, closing up 1.1 per cent at 17,005.75.

SLI’s parent company, Standard Life, said it attracted £4.3 billion into its saving and investment products during the first nine months of the year, boosting its overall assets under administration to £290 billion.

The company was helped by the £390 million acquisition of Ignis Asset Management from Phoenix in March and the 290,000 new customers automatically enrolled onto its pension products.

Finance director Luke Savage said the Edinburgh-based group expected to complete the sale of its Canadian business to Manulife for £2.2 billion early next year, £1.75 billion of which will be handed back to shareholders.

On last month’s Scottish referendum, Savage added: “We’re pleased to put it behind us.”

The company had warned it could move large parts of its operations out of the country in the event of a Yes vote, because of concerns over currency, membership of the European Union, tax and regulation.

It also revealed that pension reforms announced in March’s budget had hit its annuity sales by 67 per cent year-on-year.

From next year, savers will be handed more freedom with their pensions and no longer have to buy an annuity.

Standard Life expects to offset this by making more money from its other fee-based products.