We now have sharply increased uncertainty which could morph into chaos. This is bound to hit confidence within the UK, and the confidence of those outside the UK looking in. It will also sharply increase the confidence of EU negotiators to get a Brexit deal favourable to the EU (and painful for the UK).
This was a simple school boy marketing task, built around a straightforward message. Mrs May failed badly. She failed almost from the outset, irrespective of the appalling terrorist events. Jeremy Corbyn passed with flying colours.
It was bizarre that some clarity on the Government side only emerged when Boris Johnson appeared in recent days – never thought I’d say that!
As investment advisers, our job is to look for opportunities globally. In a global context, this UK election underlines continuing political, social, and economic uncertainty throughout the developed world. You know the problems – long term debt and demographic problems, coupled with the march of technology.
In this environment, we continue to look for parts of the world with better demographics, less debt, greater political stability, rapidly growing middle classes. Asia. This vote underlines why UK-based investors must continue to heavily weight Asia in their portfolios, whether income or growth investors. See here and here.
Investors also need to give serious thought to the question of when they should sell, which we looked at here. You shouldn’t panic – but you must think VERY carefully about your investment approach, or whether (if you’re honest) you have any investment strategy at all.
Returning to the UK. Great businesses run by focussed management will continue to shine through, and market weakness in the 6-12 months ahead will create great opportunities.
On politics, expect another general election within 12 months. It will feel very 19th century as a small number of Irish MPs come to dominate the London Parliament and its progress (or lack of it).
Finally, in a Twitter-dominated world, where sound bites can bring down governments…
Enter stage right – Boris.
Keeping a sense of humour (and perspective) is going to be vital.
WHAT THEY SAID
Here are the early headlines from the papers before the result was finalised:
“Britain on a knife edge – Daily Mail
“MAYHEM” – The Sun
“Corbyn stuns the Tories” – The Guardian
“May’s big gamble fails” – The Times
“May’s gamble on snap election set to backfire” - FT
“Cor-Blimey” – Daily Mirror
“May’s gamble backfires” – The Telegraph
“Political classes – and the nation – are stunned again, following prediction of a hung parliament” – The i
“May’s fight to stay in power” – Daily Express
“Tezza’s hopes hang in balance” – Daily Star