Britain and Spain are emerging as top destinations for investment in Europe

According to a recent Bank of America survey, Britain and Spain have been identified as the most attractive places to invest in Europe.

The survey, which included insights from 242 fund managers overseeing a total of $632 billion in assets, was conducted from July 5 to 11 and highlights a notable shift in investor sentiment towards London-listed companies.

The research underlines the revival in popularity of UK shares, which had previously fallen out of favor with traders. The FTSE 100 index, which represents Britain’s largest companies, has often been criticized for its heavy weighting towards “old economy” sectors such as energy and utilities, and for lacking robust representation of technology companies. Despite this, the FTSE 100 is up 6% this year, breaching the 8,000 point threshold for the first time, although it still lags Wall Street’s major indices, with the S&P 500 up around 20% this year.

For comparison, France’s Cac 40 is up about 0.5% this year, while Germany’s Dax 40 is up 10%. Meanwhile, the Italian stock market was the least favored by fund managers in Europe this month, followed by the French market.

Political stability in Britain is seen as a key factor driving renewed interest in British equities. Labor’s decisive victory in the July 4 general election, which won a majority of more than 170 seats, signals a smooth path for the party’s budget and legislative plans.

In contrast, political uncertainty in France caused traders to worry before the recent elections, fearing a shift towards far-left or far-right policies. However, neither extreme group was able to achieve a decisive victory, which implied a more moderate approach to taxes and spending.

In the US, fund managers expect high yields on government debt if Democrats or Republicans gain control of both the House of Representatives and the Senate, with 48% of participants highlighting trade policy as the most likely area to be affected by the upcoming presidential election . Donald Trump, the Republican nominee, is expected to adopt protectionist trade policies similar to his first term if he wins.

Fund managers also estimate a 68% probability that the global economy will achieve a “soft landing”, with inflation returning to central banks’ 2% target without significantly damaging growth.