INVESTORS roam the world for opportunity, often looking for bargains in emerging markets, but might there now be value closer to home?

Surprisingly, UK shares are out of favour with international and domestic investors. Few have had the courage to commit to the UK economy in the two years since the Brexit vote.

But investors seeking growth and value should not overlook what is on their own doorstep as sentiment could change.

Since the Brexit vote, fund manager surveys have found that global investors view UK equities as the least attractive asset class and the UK unit trust sector has typically seen net outflows over that period.

But it looks like an emotional response - undue pessimism. Will investors wait until Brexit negotiations are finalised or is there a case now for being ahead of the herd?

Amidst the Brexit uncertainty, the UK economy has proved relatively resilient. The strongest UK signal is the resumption of real wage growth, which will reverse the consumer squeeze.

Inflation appears to have peaked at the end of 2017 and is likely to ease further this year. It is already falling faster than consensus and the Bank of England expected, helped by sterling’s recovery since the lows of early 2018.

Indeed the strength of sterling is perhaps the clearest indication that confidence in the UK is returning. It is just that this reappraisal has yet to transfer to shares.

Cash-rich overseas companies appear interested in UK acquisitions and merger activity has been strong to date this year, with bids for major companies such as Fenner, Fidessa and Laird.

Corporate buyers seem to see the value in the UK market, even if institutional investors do not. That is often an early indicator of value in a stock market.

Investors may fear the UK economy becoming increasingly disconnected from the eurozone and it does not seem to fit readily within a European equity allocation.

But Europe itself will always have differences. Despite all that is said about accelerating political and monetary union in the core of Europe, there are both political and economic signs of divergence.

It is less clear that the UK is the anomaly in an otherwise aligned Europe. The European integration project could falter.

Instead, there may be investment attractions in a UK economy that retains control over its own monetary policy and some aspects of trade. Investors cannot afford to ignore the world’s fifth biggest economy and arguably also the most important financial centre.

In the MSCI World Index, UK equities have a weighting that approaches France and Germany combined, and two-thirds of Japan. It looks big enough in its own right to merit distinct consideration from investors, much as Japan is typically allocated separately from others in Asia.

Before the year is out progress on Brexit is likely, encouraging a return of overseas investors.

The UK market also has many attractive growth businesses. Medium-sized companies in particular have offered good opportunities in recent years, outperforming the FTSE 100.

Many are making good use of technology to disrupt traditional business models. In contrast, the risks may be in cyclical and low margin businesses - particularly if they are more exposed to the global economy.

Panic can force share prices down below fundamental value as investors scramble to offload perceived risk. The fact that sterling has bounced 13 per cent from the depths of the Brexit-vote panic shows how much emotion came into play at the time.

Economic fundamentals rarely move that far that fast. Currencies and stock markets often overshoot underlying value. And, despite the attention given to politics, it rarely drives long-term investment returns. As 2018 progresses, investors could begin to see the opportunity in UK equities as a value investment.

Colin McLean is managing director of SVM Asset Management.