60 seconds on the outlook for equities after the UK election

The period following Brexit is likely to be turbulent for the FTSE but there will be opportunities to buy cheap stocks.

08/06/2017
Downing-street-whitehall

Authors

David Docherty
Investment Director, Thematics

Initial flight to safety

The initial reaction of the market has been a flight to safety whereby the market has been buying stocks with international earnings.

These stocks have outperformed so far, meaning the FTSE 100 has actually gone up.

In contrast, some of the mid-cap, domestic, cyclical stocks have suffered. This is because the market is concerned the weakness in sterling will impact their margins and also the spending power of their underlying customers.

Could sterling strengthen?

Looking forward, there is a prospect of sterling strengthening at some point, possibly if markets decide that reflation could result from the government loosening the purse strings.

The other thing markets will have to calibrate is to understand better the prospect of a Labour government at some point. In so doing they will need to understand their policy on nationalisation, regulation and other intervention.

Take advantage of volatility

As always with these political events - and we’ve had many of them in the last year or so - what we try to do is to take advantage of market volatility to buy companies trading on cheap valuations

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

Authors

David Docherty
Investment Director, Thematics

Topics

Equities
UK
David Docherty
Politics
Video
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The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.