The UK economy has collapsed 20%, but I’d keep buying this safe FTSE 100 share!

first_img Cliff D’Arcy | Wednesday, 12th August, 2020 | More on: MNG The UK economy has collapsed 20%, but I’d keep buying this safe FTSE 100 share! “This Stock Could Be Like Buying Amazon in 1997” Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. UK investors were braced for bad news regarding the economy’s descent during lockdown. Even so, the news was worse than many expected. However, the FTSE 100 index is up 100 points (1.6%) as I write.The worst economic collapse in historyToday, the Office for National Statistics (ONS) revealed that, thanks to a lockdown lasting from March to July, the UK underwent an historic economic contraction.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…In the second quarter, UK gross domestic product (GDP, or national output) plunged by more than a fifth (20.4%). This sent the UK tumbling into the deepest depression on record, with the FTSE 100 index following suit.For the record, this is the worst slump in Europe and twice the contraction seen in the US over this period. Indeed, the worst quarterly fall in UK GDP during the global financial crisis of 2007–09 was a mere 2.1%. It’s also the worst figure by a long way in quarterly data that goes all the way back to 1955.What’s more, the UK’s coronavirus-driven economic collapse was worse than that in the US, Germany, Italy, France, and even Spain. Yikes.Good news for FTSE 100 investorsWe all knew Q2 would be bad, but the bounce-back has already started. In June, GDP leapt by 8.7% from May. This means UK GDP has risen 11.3% since bottoming out in April.As the UK economy bounced back from its lows, so too did the FTSE 100 index. Since crashing below 5,000 on 23 March, the FTSE 100 has rebounded hard. Today, it hovers around 6,270, up more than a quarter (25.6%) from its 2020 low.I see this FTSE 100 as safe, solid, and solventAt the weekend, I wrote about investment-management firm M&G (LSE: M&G) – a FTSE 100 share I said was a real steal. Today, M&G released its half-year results, so let’s review the headline figures.The bad news for M&G – only a recent entrant to the FTSE 100 – is that pre-tax profits (PTP) collapsed by almost three-fifths. In the first half of 2020, profits dived to £309m, down 56.7% year on year. However, stripping out £157m of demerger costs and market volatility caused by Covid-19, M&G’s IFRS after-tax profit was a healthy £826m (2019: £795m).Another setback for M&G was a decline in assets under management to £339 billion, £2bn lower than for H1/19. Likewise, the FTSE 100 firm’s ‘Shareholder Solvency II coverage ratio’ – a measure of its balance-sheet strength – fell to 164% (from 176% at end-2019).I still see M&G as crazily cheapGiven we’ve just come through the FTSE 100’s steepest-ever decline, I think M&G has done rather well in an extremely difficult environment.Also, M&G has declared an interim cash dividend of 6p a share, while the full-year payout could be 12p or more. Also, the FTSE 100 firm plans to generate excess capital of at least £2.2bn over three years. This alone is almost half M&G’s current market value of £4.51bn.As I write, M&G shares trade at 177.8p, up 4.15p (2.4%) on today’s news. They peaked at 245.9p on 19 February and, a month later, closed at 84.12p on 18 March. This tells me that M&G shares are often mispriced, relative to its underlying value.Right now, M&G shares trade on a price-to-earnings ratio of 4.25, for an earnings yield of 23.5%. They also offer a bumper dividend yield of 6.86%. For me, this is crazily cheap for a FTSE 100 share, so I’d buy and hold M&G today for juicy dividends and capital payouts! Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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