The UK General Election 2015 - what does it mean for stocks?
Most finance types and market watchers in the UK are celebrating this morning with the news that the Conservative Party have achieved the unexpected: an overall majority victory in the UK General Election which should herald at the margin more free market centred policies.
The FTSE-100 index certainly likes it and has bounced back to around the 7,000 index point mark...
Source: BigCharts.com
...and selected sectors such as utilities, financials and tobacco companies who anticipate being less impacted by regulation and taxes going forward are having strong days.
But don’t load up the truck with UK shares even if the Conservatives are the political party where the greatest proportional market returns have been achieved:
Source: www.thisismoney.co.uk (here)
The Conservative majority is wafer thin and tricky promises such as an ‘in/out’ referendum on Europe have to be implemented. Then there is the question of clear political division between the rest of the UK and Scotland as nicely captured by this front page from the Scotsman newspaper noting the performance of Scottish nationalists who are vying for independence and took over 95% of seats within their national borders.
Otherwise UK listed shares greatest attribute may remain their high exposure to foreign markets (even if their largest export market remains...the troubled Eurozone).
In summary it could have been worse but it is not fantastic. Careful stock picking in UK-listed names with good international exposures / underlying products and a focus on dividends/shareholder remuneration remains the key.
Just don’t extrapolate the result very bullishly.
Image sourced from here.
Further thoughts from Chris Bailey / Financial Orbit can be found on twitter @financial_orbit or at the website www.financialorbit.com. You can contact Chris directly via email at [email protected]
