Save & Invest Financial Planning

Politics Markets and Good Sense

It’s hard to get away from politics and elections and it is not surprising that investment markets have, and continue to be, affected by what’s happening in the global political world.

The UK has now had Brexit for virtually 4 years, and, 3 and a half years after the Referendum it is still not clear what our relationship with Europe will be or when businesses will know how to adapt to a new environment. However, it appears that whatever the outcome of the election on 12 December, Brexit is likely to continue as one of the major talking points in the UK for years to come.

So, it is not a surprise that, in general, much of the UK stock market has lagged many global markets. However, if there is more clarity over Brexit by 31 January there could be a degree of uplift, especially for companies with most of their turnover deriving from the domestic UK economy.

The falling pound after the referendum, helped UK companies which earned much of their profits in overseas markets and it also helped UK investors with investment funds invested globally. In the last couple of the months the pound has strengthened and it could increase further. This could be good news for investment funds in the UK that invest in domestic focussed UK companies that have previously been hit by a low pound, but could dampen overseas returns.

It’s not just the UK that has political issues. The recent Spanish election has left the main party in a weaker position and this has been a drag on the Spanish stock market. In the US the stock market has continued to power ahead despite the start of impeachment procedures against the President and the continuing trade war with China. The central bank, after saying at this point in 2018, that they foresaw 3 or 4 interest rate rises in 2019, is now saying that it may cut interest rates if growth in the economy slows!

The world is therefore very unpredictable, but as Save & Invest creates portfolios using a range of diversified investment funds from well- established asset management groups, we have smoothed much of the turbulence of markets and helped our clients to feel confident that their monies are being well managed. There will be times when markets dip, but by having a patient and well thought out plan to cope with volatility, our clients can take a more relaxed view of investment markets.

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