Investors' Chronicle Simon Thompson: What to expect in 2026
Dec 9, 2025
Simon Thompson, associate editor at Investors' Chronicle, discusses the future of UK small-cap stocks with insights from his 27 years in market analysis. He believes UK equities are positioned well for 2026, driven by strong performance and valuation discounts. They discuss the impacts of the recent Budget, the potential for increased M&A activity, and concerns over the shrinking AIM market. Simon outlines favored sectors like tech and REITs, while sharing a sneak peek into his more aggressive Bargain Shares selection strategy for the coming year.
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UK Equities Look Cheap Versus US
- UK equities trade at a meaningful discount to US peers, offering scope for outperformance and absolute returns.
- The FTSE All-Share's free-cash-flow yield is over twice the S&P 500's, implying valuation upside.
Stock Picking Beats Indexes On AIM
- Simon's small-cap stock-picking record shows many individual winners despite AIM underperformance.
- Deep-value screens (cash-adjusted P/E ~10) let active pickers outperform broad AIM indices.
Slower Labour Market Could Trigger Cuts
- Slower wages and falling vacancies could allow the Bank of England to cut rates, helping indebted small caps.
- Falling US rates and political appointments could amplify global rate cuts and support equities.