On a special conference call held the day after the election, our investment experts reflected on the result and answered client questions about its possible implications. Here are the highlights.
What it means for the UK economy
Sven Balzer: “Markets are enjoying the election result because it removes any political uncertainty, at least for the next six months. Clearly Brexit is now going to happen. Any scenario of a second referendum is off the cards. Any no-deal Brexit is also off the cards.
“This should encourage foreign capital back into the UK. Also, UK companies have held back on investing in their businesses for some time now, and there should be at least a partial recovery there. And there should be some fiscal stimulus coming.
“All of this, along with the more orderly path forward that we now have, should lead to a pick-up in the UK economy.”
Mohammad Syed: “From an investment perspective, the clear outcome of the election is very positive news for markets. We believe it creates greater stability for the country, stability that has arguably been absent since 2016.”
Our investment approach
Alan Higgins: “It’s always worth remembering that we are a global investor. A balanced portfolio at Coutts is around 50% invested in equities. Out of that 50%, circa 20% is invested in UK equities, so the majority is actually outside the UK.
“Within our UK allocation, we had tilted the portfolio towards more domestic themes and that’s worked well. We believe that the domestic and mid-cap holdings – the FTSE 250 – should continue to offer really good opportunities.
“If we’re right and the UK economy starts to improve, the strong performance we’ve seen from the mid-caps should be reinforced over the coming months.”
The impact on Europe
Sven Balzer: “Now that a no-deal scenario is off the cards, all in all, that has a positive spill-over effect for Europe. European markets also reacted positively to the election news.
“Europe, to a large extent, is also dependent on how the world economy evolves, and we’ve seen some encouraging signs from China and some emerging markets. We’ve seen some stabilisation in our forward-looking indicators on the economic momentum in Europe, so we’re fairly positive on Europe going forward.”