The recent market sell-off has hit UK shares hard. But global markets have also been hammered.
The volatility was triggered by higher-than-expected US inflation data. This was followed by more negative economic forecasts concerning the UK and Germany, as well as new Covid-19 restrictions in China.
But a correction also creates opportunities. In fact, in my opinion, despite the fiscal tightening around the world over the past week, the economic situation hasn’t changed, particularly in the UK. It’s still pretty negative.
However, I’m investing for the long run. So, here are three UK-listed shares I’m looking at adding to my portfolio.
International Airlines Group
IAG (LSE:IAG) is down a staggering 44% over the past 12 months. And, like others, I thought the worst was behind airlines in 2021.
Looking at my portfolio, my decision to buy IAG a few months ago looks like an investment mistake on paper.
But, in the long run, I think the airline group — which includes British Airways — will prove a sound buy.
For one, IAG’s market capitalisation is £5.5bn, but the enterprise value stands at £16.15bn. The market cap takes into account the high amount debt held by the company and the perception of the market. But you’d expect the enterprise value and market cap to be closer.
Demand for travel is also particularly high right now. The issue is around staffing and travel disruption. Come the end of July, we’ll see how well IAG performed in Q2, but my expectation is that the impact of well-publicised travel disruption has been overdone.
Baillie Gifford Japan Trust
The Baillie Gifford Japan Trust (LSE:BGFD) is a publicly traded investment trust, focusing exclusively on Japan. It is run by the same asset management firm as the Scottish Mortgage Investment Trust.
This is a growth-focused fund, and that explains why it’s fallen particularly heavily over the past year.
But there are several reasons why I’m optimistic here.
Firstly, inflation isn’t hitting Japan in the same way it’s hitting the rest of the world. Inflation stood at 1.9% in May. That’s below the 2% target.
Secondly, the Bank of Japan hasn’t increased rates. It’s keeping borrowing costs down to help Japan’s economy recover after the pandemic. This should be good for Baillie Gifford’s growth-focused portfolio.
Finally, Japan might be better positioned to deal with the scarcity we’re seeing globally. But don’t just take my word for it, there’s plenty of material to support this.
Bank of Georgia
I invested in the Bank of Georgia (LSE:BGEO) when Russia invaded Ukraine, despite the bank’s share price collapsing.
But it’s been a good investment so far, and I still think it’s got further to go, despite being down 7.5% this week.
The bank has been going from strength to strength, as has the Georgian economy. The economy grew by a further 14.4% in Q1 despite the war in Ukraine.
Profits doubled in 2021 and 2022 looks like it should be another strong year. Peer TBC Bank has recently announced a 46% YOY increase Q1 profits.
On the back of a stellar 2021, Georgia’s second largest bank has a P/E ratio of just four.
For me, Georgia is a great growth market. Stable, democratic, and I believe Tbilisi is one of the coolest places in Europe!
