(Bloomberg) -- The rally in global stocks this year has left UK equities far behind and there is little prospect of this changing because of the clouded growth outlook for Britain, according to HSBC Bank Plc strategists.

“The UK market is likely to remain range-bound as long as medium-term macro uncertainty persists,” strategists Edward Stanford and Amit Shrivastava wrote in a note dated Aug. 14. They cite “significant” fund outflows as well as a drop in corporate earnings as factors that will constrain any further advance. 

In addition, the strategists note that the market-cap weighting of London-listed stocks in the FTSE All World Index has shrunk in the past two decades, meaning the UK market is now less of a “must have” for global investors. 

The FTSE 350 Index has shown no gains this year compared with a 13% rally in the MSCI All-Country World Index. Still, market strategists including those at BlackRock Inc. have turned more optimistic about the blue-chip FTSE 100 due to its cheaper valuations, while a survey from Bank of America Corp. on Tuesday showed the UK is now the favorite market among European investors.

Inflation data due Wednesday will present the next test for UK stocks as the Bank of England’s policy outlook remains uncertain. Figures on Tuesday showed British wage growth accelerated at the strongest pace on record, underscoring the BOE’s concerns that it hasn’t yet broken the wage-price spiral feeding price pressures across the economy.

Read More: Slowing Inflation Is Crucial to Revive UK Equities: Taking Stock

The team at HSBC — who correctly predicted that cheaper valuations would support European equities in 2023 — remains underweight on UK stocks, while favoring a mix of cyclical and defensive sectors. The strategists said they’d need to see an improving growth outlook, a rise in corporate earnings and a stronger dollar — which would benefit the export-heavy FTSE 100 — to turn more positive in their outlook.

--With assistance from Michael Msika.

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