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Confidence among UK investors is souring rapidly as worries mount over the domestic economy. If this continues, the FTSE 250 index of shares — which is far more exposed to troubles at home than the internationally flavoured FTSE 100 — could be in for a tough time.
According to Hargreaves Lansdown, confidence in the UK economy has slipped 16% among its clients this month. It says that “weak GDP growth, mixed messaging on fiscal plans, and wavering political clarity post-election have all added to investor caution“.
Troublingly, it added that “confidence in the UK stock market also slipped at a similar level“.
Two shares on my watchlist
While a rising tide lifts all ships, the opposite is also true. So, if the broader FTSE 250 drops sharply, it’s possible that quality companies with limited or no exposure to the UK could fall heavily alongside more exposed firms.
This could give eagle-eyed investors a chance to nip in and grab some bargains. If the UK stock market does slump in the weeks and months ahead, here are two top mid-cap shares I’ll consider snapping up.
Top trust
Finsbury Growth and Income Trust is already on my radar, even before a possible stock market correction. It trades at a 7.7% discount to its net asset value (NAV) per share.
Helmed by legendary fund manager Nick Train, it holds shares in 21 (mainly UK) shares. These are multinationals with strong balance sheets, market-leading positions, and proven business models. The portfolio includes names like Experian, Sage Group, London Stock Exchange, and Unilever.
Its high selection of tech stocks deserves close attention from investors, in my opinion. On one hand, it may leave the trust especially vulnerable during a global economic downturn. But it also provides enormous long-term growth opportunities thanks to phenomena like artificial intelligence (AI) and cloud computing.
A high-performing bank
In my view, TBC Bank (LSE:TBCG) is already one of the FTSE 250’s greatest value stocks. It’s why the business already commands a spot on my investing watchlist.
It trades on a forward price-to-earnings (P/E) ratio of 6.6 times, making it cheaper than other emerging market banks like HSBC and Banco Santander. And its dividend yield for 2025 is a sector-beating 5.5%.
Emerging market stocks can expose investors to regional risks not seen in the likes of the UK. In the case of TBC, ongoing political uncertainty in its key market of Georgia poses a potential threat to earnings.
That said, emerging market stocks can also offer significant growth opportunities as wealth levels in these economies rapidly rise. And TBC, which is Georgia’s largest retail bank, is capitalising on this opportunity to the fullest.
Latest financials showed operating income and net profit up 23% and 5.2%, respectively, in the first half. City analysts expect annual earnings here to leap 15% year on year in 2025, a trajectory that also leaves TBC trading on a forward price-to-earnings growth ratio of 0.5. Any reading below one implies that a share is undervalued.
