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9th June 2017
Election Update

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08:00 AM
The results of the election are in and it appears as though there is no overall majority and thus a hung parliament. The Conservatives seem to have only been able to win about 318 seats which puts them short of a majority by under ten seats. Whilst no one is exactly sure what this means at the moment, it is far from ideal for markets and for the impending Brexit negotiations. Undoubtedly, parties will try and form a working majority but this is deeply uncertain with the SNP, Liberal Democrats and Labour highly unlikely to join forces with the Conservatives. Certain vote by vote agreements may be able to be reached by Conservative party, but a formal coalition looks doubtful. The turnaround from the labour party has been remarkable, having been 24 points behind the Conservatives at the start of the campaign. Jeremy Corbyn has clearly been very successful in galvanising the younger voters to turn out in record numbers.

Sterling has weakened  against the Dollar and Euro to 1.27 and 1.13 respectively. Markets have had a mixed reaction with the main index up by 1% due to the fall in sterling and the mid-cap index down by 0.5% due to weakness in housebuilders and retailers. The situation remains very fluid and unstable and we will update clients if there are any significant developments. BRI has a strong investment process that leads to well diversified portfolios across a number of asset classes and currencies. Over the last year we have been gradually taking less ‘risk’ in portfolios and will look to change this as and when appropriate. Not only are we focussing on the domestic situation but are keenly aware of the uncertain global environment, whether that is political or economic. We continue to selectively deploy capital into good quality companies and funds but are consciously looking to protect capital in the event of any future market volatility.

03:00 PM
After the initial shock of a hung parliament, financial markets have calmed down to a certain extent. The main market is up about 50 points and the more domestically focussed index is down marginally. Sterling has recovered some ground, but is still a couple of cents lower against the Dollar and Euro than it was yesterday. The Conservatives look like they will try and govern on a confidence and supply arrangement with the DUP of Northern Ireland. Whilst this is far from the landslide majority that markets were hoping for, it does hopefully convince markets on continuity of government.

It remains to be seen whether Theresa May will be Prime Minister over the short, medium or long term or whether a new leader will step up. The outcomes of the last 24 hours do lead to more uncertainty from an economic and political perspective and will undoubtedly complicate the impending Brexit negotiations. It is still difficult to predict how these developments will impact financial markets in the future. We remain focussed on protecting portfolios from volatility whilst seeking to capitalise on opportunities as and when they arise.

Please call us on 01676 523 550 if you would like to discuss this further.