Brexit Panic

The past couple of years since the UK public’s vote to leave the European Union has been a trying and confusing time for British politics. In the past 24 hours we have finally seen the substance of the deal behind the agreement reached between Prime Minister Theresa May’s negotiating team and those representing the EU27.

brexit-referendum-uk-1468255044bIX.jpgThe publication of the proposed deal has taken UK politics from a period of uncertainty to arguably its most chaotic in peace time. How should investors react, is now a time to panic? James Klempster (CFA) Head of Investment Management of Momentum Global Investment Management, one of our UK regulated, discretionary fund managers shares their view. Click here to learn more

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UK Equities: Unloved and Underrated

BrexitWith Brexit looming many of our clients have asked us how we are managing exposure to UK assets within our global portfolios. The challenge of positioning portfolios appropriately for Brexit, be it to mitigate risk or take advantage of potential opportunities, is tough as the negotiations could go either way: an acceptable future trade relationship with the EU or a no-deal outcome. These potential outcomes would have substantially different implications for investors.

Andrew Hardy (CFA) of Momentum Global Investment Management, one of our UK regulated, discretionary fund managers shares their view. Click here to learn more.

Property Jitters

UK PropertySame old topic but Jeromine Bertrand (CFA) of Momentum Global Investment Management, one of our UK regulated, discretionary fund managers thought it was time to revisit UK property and explain why, despite the negative headlines in the press since the Brexit vote, they’re happy to be contrarian at Momentum.

In an environment where most asset classes are expensive and government bond yields are close to all-time lows, they believe that UK Real Estate is relatively attractive and provides good diversification benefits, hence deserving of a place in their multi-asset portfolios. Click here to learn more.

One week until Article 50

BrexitIts just a week until Britain is expected to trigger Article 50, sterling is at a three week high, UK inflation is at its highest since 2013, leaked EU documents suggest Britain could be kicked out EU and fined £50bn.  Add to this that the Bank of England (BoE) Chief Economist Andy Haldane is postulating a base rate rise to 4.25% that could wipe out 1.5 million jobs but boost productivity in the long run.  Scotland is pushing harder for another independence vote, and the BoE predicting a further retail slowdown: all in all perhaps enough commotion to burrow yesterday’s embarrassing infighting of the Labour Party. Or perhaps not.  It seems that it doesn’t matter how old a nation’s democracy, advanced its economy or established its laws; political risk teeters when the populous lambast inequality and the public coffers are constrained by their own indebtedness.

Following Labour’s commotion yesterday, with Labour deputy leader Tom Watson clashing with shadow chancellor John McDonnell and an embarrassing parliament session feud, Jeremy Corbyn’s video address seemed a phony attempt to reassure members that the embarrassment only goes to prove that ‘spirits in the Labour party can run high’. Mercifully, attention is focused less on Labours potential disconnect and more on the impending Brexit annulment.

Prime Minister Theresa May’s ‘no deal for Britain is better than a bad deal’ is being threatened by the EU’s leaked plans for a prolonged legal battle, seeking £50bn of apparent dues, should the UK leave the EU with no deal. President of the European Council Donald Tusk promised to make ‘the process of divorce the least painful for the EU’ implying the obvious antithesis for the UK. But as difficult as the Brexit process could be, the legitimacy of the EU’s request for alimony seems tenuous and the potential damage to the EU from a go-it-alone Britain should prove a strong incentive for some sort of eventual deal.

Weekly Market Update

News this past week:

  • US economic growth disappoints as Dow Jones reaches 20,000
  • Trump’s executive orders fail to stir markets
  • UK High Court: Parliament must vote to trigger Brexit
  • UK economy grows 0.6% in Q4
  • Weaker yen boosts Japanese exports

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UK Prime Minister Theresa May delivered her keynote speech on Brexit

Theresa May.pngShe said that the UK government will put the Brexit deal it agrees with the European Union to a parliamentary vote. She also vowed to make a ‘truly Global Britain’. “I want this United Kingdom to emerge from this period of change stronger, fairer, more united and more outward-looking than ever before. I want us to be a secure, prosperous, tolerant country, a magnet for international talent,” May said.

The FTSE 100 traded negative after the speech. However, the sterling was up by more than 2.8 percent against the U.S dollar, putting it on track for its biggest daily increase since 1998.

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Source: CNBC, 17 Jan