Received: from nobody by stodi.digitalkingdom.org with local (Exim 4.87) (envelope-from ) id 1dJHaG-0002Im-Rm for lojban-newreal@lojban.org; Fri, 09 Jun 2017 03:56:04 -0700 Received: from r1a-carcharodontosaurus.mta.dotmailer.com ([94.143.105.69]:54950) by stodi.digitalkingdom.org with esmtps (TLSv1.2:ECDHE-RSA-AES256-GCM-SHA384:256) (Exim 4.87) (envelope-from ) id 1dJHaC-0002Ha-J6 for lojban@lojban.org; Fri, 09 Jun 2017 03:56:04 -0700 DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; s=dkim1024; d=updates.tilney.co.uk; h=From:Date:Subject:Message-Id:To:List-Unsubscribe:Reply-To:MIME-Version: Content-Type; i=tilney@updates.tilney.co.uk; bh=RrxLczLgXvYu0wzlerG/4MAVzgR0VpJ8cwcrkM+XjoE=; b=fepUVKkp9bBZ4fWTvdYXOb6Q6OfkC7QZDFbJiutjcg59Pf4zpejeqqu3evCK6P013smdgjjKh8hw efWS+HXJQtHPn2WsGd6LfkBiuyZ59EF7+kE7E7PoqcZhqRJjKAvhfGFf45fYFCKn8PXYvP205LTD hE17cKsFbdPz6YBnU08= From: Tilney Date: Fri, 09 Jun 2017 10:55:51 +0000 Subject: General Election =?utf-8?b?4oCT?= our view Message-Id: To: lojban@lojban.org X-Mailer: dmDroid X-CampaignID: BTGRI X-dmid: 378T-H1R6-54P2BF Feedback-ID: 378T:H1R6:20170609:DDGESP List-Unsubscribe: , Reply-To: Tilney MIME-Version: 1.0 Content-Type: multipart/alternative; boundary="=-tcsYb/0eVuKFE2My54eLoQ==" X-Spam-Score: -1.5 (-) X-Spam_score: -1.5 X-Spam_score_int: -14 X-Spam_bar: - --=-tcsYb/0eVuKFE2My54eLoQ== Content-Type: text/plain; charset=utf-8 Content-Transfer-Encoding: quoted-printable General Election =E2=80=93 our view A surprise result, but with the likelihood of a minority Conservative = government supported by the DUP, this is not a market-unfriendly outco= me. The impact on globally diversified portfolios is expected to be mi= nimal. In the UK we now expect a softer Brexit outlook, though some of= these market-positives are seen to be offset by greater political unc= ertainty. In the latest of a string of political shocks, the UK electorate appea= rs to have turned on the incumbent government, denying the Conservativ= es a majority by delivering a hung parliament. Having started with a s= trong focus on Brexit and amid accusations of opportunism by the Conse= rvatives, the nub of discussion turned over the last seven weeks towar= ds austerity and security. The situation is developing rapidly, but as= we write, it seems likely the Conservatives will be able to hold on t= o power through some arrangement with the Democratic Unionist Party. B= elow we discuss what transpired and the impact we see this having. Expectations versus reality Yet again, the pollsters and bookies appear to have had a bad time of = it in aggregate. With hindsight, it seems clear some of the consistent= ly outlying polls had picked up on something, and the trend of polls d= id highlight the eroding Conservative lead. In the final opinion polls on Wednesday, the lead ranged from 12% down= to just 1%. However, it is much harder to turn these polls into actua= l seats in parliament due to our first-past-the-post system, with the = tight polls adding to the recent volatility. Just ahead of the electio= n, the average implied Conservative majority was 36 seats, though with= a full range between a 78-majority and a 14-seat shortfall. In the fi= nal showing, the Conservative lead fell to just 2%, with 42% for the C= onservatives and 40% Labour, leading to an expected 7-seat shortfall =E2= =80=93 within the range of expectations, albeit with lower conviction. Away from the opinion polls, the bookmakers were also indicating a str= ong likelihood of a Conservative majority, with the odds implying an 8= 0-90% probability on the day of the election (Source: Oddschecker). Ta= ken together, therefore, expectations broadly =E2=80=93 and therefore = in markets =E2=80=93 were for some level of Conservative majority, and= the surprise has already had an impact. Initial market reaction It is far too early to make much of a meaningful market interpretation= . What we do know is that this outcome probably has the greatest uncer= tainty attached to it, and that, in turn, will likely lead to a period= of heightened volatility until we have clarity. The immediate impact was on currency, with sterling selling off sharpl= y as the exit poll, released at 10pm gave the first solid indication o= f a hung parliament. Whilst the fall has been steep in the very short term, losing between = 1.5-2.0%, it should be seen in the wider context =E2=80=93 it is still= comfortably above the post-Brexit low of US$1.20, and in reality has = done little more than reverse the premium the currency has been receiv= ing since the General Election was announced in April. The equity mark= et opened marginally up, whilst gilts were slightly softer. What happens now? With no party having an overall majority, there will now follow a rapi= d period of negotiations with a view to achieving some sort of workabl= e agreement =E2=80=93 either a formal coalition, or a minority governm= ent working on a less formal basis. Theresa May remains Prime Minister= in the interim, though there is now a question mark as to whether thi= s disastrous result for the Conservatives will lead to her resignation= . From here, there are several deadlines involved =E2=80=93 the new Pa= rliament needs to meet on Tuesday 13 June, requiring some form of gove= rnment. However, it is possible that no-one can form such a government= , in which case the next test is on Monday 19 June, when the Queen=E2=80= =99s Speech effectively acts as a vote of confidence. Failure here wil= l initiate a countdown of 14 days before a fresh General Election will= most likely be triggered. In reality, the most likely course from here is that the Conservatives= come to an agreement with the Democratic Unionist Party, which has 10= seats, giving it a total expected voting bloc of 329 seats (326 is ne= eded for a majority), although this is could either be a formal coalit= ion or a looser arrangement with the Conservatives as a minority gover= nment. Prior to the election, there had been talk of a =E2=80=98progre= ssive alliance=E2=80=99 of Labour, the SNP and the Liberal Democrats, = but the numbers make this much less likely now. Our view Whilst clearly a surprise, the outcome is not as market-unfriendly as = it could have been, particularly given the likelihood of a continued C= onservative-led government. We therefore see little change to the legi= slative outlook, though some of the more aggressive Conservative plans= may need to be abandoned. At the same time, the risk of higher corpor= ate taxation and a significantly wider deficit has dissipated. From an= EU point of view, the collapse of the Conservative majority could lea= d to a softer stance on Brexit, which is likely to be taken as market-= positive. There are still clear risks from this result. In the short term, uncer= tainty whilst party negotiations go on could fuel market volatility. I= t is also important that Brexit negotiations, due to start on Monday 1= 9 June, are not delayed significantly, given the magnitude of the task= . The ongoing political uncertainty will also remain an ongoing risk =E2= =80=93 coalitions or minority governments are inherently less stable t= han outright majorities, making a full five-year term much less likely= . Current Prime Minister Theresa May is also likely to come under a lo= t of pressure based on what is a disastrous result from her party=E2=80= =99s point of view =E2=80=93 if she stays on, a leadership challenge i= s likely to be in the back of people=E2=80=99s minds constantly. Taken together, there is every reason to believe sterling will remain = range-bound near current levels =E2=80=93 lower than when the General = Election was first announced given the ongoing political uncertainty, = but higher than the post-Brexit depths on the softer-Brexit outlook. T= he legislative and fiscal outlook remains business friendly, whilst th= e fall in sterling will boost overseas portfolio exposures, and we exp= ect our UK equity funds to benefit from the translational effect of ov= erseas earnings in underlying companies. In conclusion Whilst highly relevant to UK investors as citizens, the overall impact= of this election result is minimal for the portfolios that we manage.= Our philosophy and process favours diversifying geographically as wel= l as by asset class, and the drivers of long-term performance will be = the larger macroeconomic themes and global market dynamics that we dis= cuss in other publications, and which local UK politics are very unlik= ely to have a material impact on. Where there is an impact, mainly through UK equity exposure, we have a= constructive outlook for the market, which itself benefits more from = the global economy than the domestic economy, and where we favour mana= gers who are able to find high quality and value-adding companies. We hope you have found this election update helpful. Please do get in = touch if you have any questions or would like more information. Connect with us ( http://updates.tilney.co.uk/378T-H1R6-54P2BF-8PTXT-0/c.aspx ) ( http://updates.tilney.co.uk/378T-H1R6-54P2BF-8PTXU-0/c.aspx ) ( http://updates.tilney.co.uk/378T-H1R6-54P2BF-8PTXV-0/c.aspx ) Important Information The value of investments, and the income derived from them, can go dow= n as well as up and you can get back less than you originally invested= . Prevailing tax rates and reliefs are dependent on your individual circ= umstances and are subject to change. This email does not constitute a = personal recommendation to invest. We hope you've found this message helpful. However, if you would prefe= r not to receive future emails from Tilney simply unsubscribe http://u= pdates.tilney.co.uk/378T-H1R6-E854P2BF2B/uns.aspx 643905 17063400 Tilney is a trading name for: Tilney Investment Management Services Lt= d (Reg. No: 2830297), Tilney Discretionary Investment Management Ltd (= Reg. No: 02519968), Tilney Investment Management (Reg. No: 02010520), = Tilney Asset Management Ltd (Reg. No: 03900078), Tilney Asset Manageme= nt Services Ltd (Reg. No: 03691998), Tilney Discretionary Portfolio Ma= nagement Ltd (Reg. No: 00793636), Thurleigh Investment Managers LLP (R= eg. No: OC309191), Tilney Financial Planning Ltd (Reg. No: 607039), Be= stinvest (Consultants) Ltd (Reg. No: 01550116) and HW Financial Servic= es Ltd (Reg. No: 02030706), each of which is authorised and regulated = by the Financial Conduct Authority and a subsidiary of Tilney Group Lt= d (Reg. No: 08741768). All registered in England and Wales with regist= ered office: 6 Chesterfield Gardens, Mayfair, London W1J 5BQ. Further = details are available here ( https://www.tilney.co.uk/registered-detai= ls ). This email is for the information of the addressee only and should not= be reproduced and/or distributed to any other person. This email may = be sent on behalf of any of the above-named companies and should be co= nsidered a financial promotion on all occasions where the contents of = this email could be considered to be an invitation to engage in an inv= estment activity. Past performance is not a guide to future performanc= e. This e-mail is subject to terms and risk warnings available here ( = https://www.tilney.co.uk/email-terms-and-conditions ). By communicatin= g electronically with us, you consent to these terms. If you received this email in error, please accept our apology. We wou= ld be obliged if you would email contact@tilney.co.uk ( contact@tilney= .co.uk ). --=-tcsYb/0eVuKFE2My54eLoQ== Content-Type: text/html; charset=utf-8 Content-Id: Content-Transfer-Encoding: quoted-printable General Election =E2=80=93 our view = = =20 =20 =20 =20 =20 =20 =20 =20 =20 =20 =20
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General Election =E2=80=93 our view=20

View in b= rowser
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020 7189 2400

Req= uest a call back

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General Election =E2=80=93 our view=20

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A surprise result, but with the likelihood of a minority Conservati= ve government supported by the DUP, this is not a market-unfriendly ou= tcome. The impact on globally diversified portfolios is expected to be= minimal. In the UK we now expect a softer Brexit outlook, though some= of these market-positives are seen to be offset by greater political = uncertainty.

In the latest of a string of political shocks, the UK electorate appea= rs to have turned on the incumbent government, denying the Conservativ= es a majority by delivering a hung parliament. Having started with a s= trong focus on Brexit and amid accusations of opportunism by the Conse= rvatives, the nub of discussion turned over the last seven weeks towar= ds austerity and security. The situation is developing rapidly, but as= we write, it seems likely the Conservatives will be able to hold on t= o power through some arrangement with the Democratic Unionist Party. B= elow we discuss what transpired and the impact we see this having.

3D=

Expectations versus reality

3D=
Yet again, the pollsters and bookies appear to have had a bad time of = it in aggregate. With hindsight, it seems clear some of the consistent= ly outlying polls had picked up on something, and the trend of polls d= id highlight the eroding Conservative lead.

In the final opinion polls on Wednesday, the lead ranged from 12% down= to just 1%. However, it is much harder to turn these polls into actua= l seats in parliament due to our first-past-the-post system, with the = tight polls adding to the recent volatility. Just ahead of the electio= n, the average implied Conservative majority was 36 seats, though with= a full range between a 78-majority and a 14-seat shortfall. In the fi= nal showing, the Conservative lead fell to just 2%, with 42% for the C= onservatives and 40% Labour, leading to an expected 7-seat shortfall =E2= =80=93 within the range of expectations, albeit with lower conviction.=

Away from the opinion polls, the bookmakers were also indicating a str= ong likelihood of a Conservative majority, with the odds implying an 8= 0-90% probability on the day of the election (Source: Oddschecker). Ta= ken together, therefore, expectations broadly =E2=80=93 and therefore = in markets =E2=80=93 were for some level of Conservative majority, and= the surprise has already had an impact.

3D=
=20 =20
<= tbody>
3D=

Initial market reaction

3D=
It is far too early to make much of a meaningful market interpretation= . What we do know is that this outcome probably has the greatest uncer= tainty attached to it, and that, in turn, will likely lead to a period= of heightened volatility until we have clarity.

The immediate impact was on currency, with sterling selling off sharpl= y as the exit poll, released at 10pm gave the first solid indication o= f a hung parliament.

Whilst the fall has been steep in the very short term, losing between = 1.5-2.0%, it should be seen in the wider context =E2=80=93 it is still= comfortably above the post-Brexit low of US$1.20, and in reality has = done little more than reverse the premium the currency has been receiv= ing since the General Election was announced in April. The equity mark= et opened marginally up, whilst gilts were slightly softer.

3D=
=20 =20 =20
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3D=

What happens now?

3D=
With no party having an overall majority, there will now follow a rapi= d period of negotiations with a view to achieving some sort of workabl= e agreement =E2=80=93 either a formal coalition, or a minority governm= ent working on a less formal basis. Theresa May remains Prime Minister= in the interim, though there is now a question mark as to whether thi= s disastrous result for the Conservatives will lead to her resignation= . From here, there are several deadlines involved =E2=80=93 the new Pa= rliament needs to meet on Tuesday 13 June, requiring some form of gove= rnment. However, it is possible that no-one can form such a government= , in which case the next test is on Monday 19 June, when the Queen=E2=80= =99s Speech effectively acts as a vote of confidence. Failure here wil= l initiate a countdown of 14 days before a fresh General Election will= most likely be triggered.

In reality, the most likely course from here is that the Conservatives= come to an agreement with the Democratic Unionist Party, which has 10= seats, giving it a total expected voting bloc of 329 seats (326 is ne= eded for a majority), although this is could either be a formal coalit= ion or a looser arrangement with the Conservatives as a minority gover= nment. Prior to the election, there had been talk of a =E2=80=98progre= ssive alliance=E2=80=99 of Labour, the SNP and the Liberal Democrats, = but the numbers make this much less likely now.

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=20 =20
<= tbody>
3D=

Our view

3D=
Whilst clearly a surprise, the outcome is not as market-unfriendly as = it could have been, particularly given the likelihood of a continued C= onservative-led government. We therefore see little change to the legi= slative outlook, though some of the more aggressive Conservative plans= may need to be abandoned. At the same time, the risk of higher corpor= ate taxation and a significantly wider deficit has dissipated. From an= EU point of view, the collapse of the Conservative majority could lea= d to a softer stance on Brexit, which is likely to be taken as market-= positive.

There are still clear risks from this result. In the short term, uncer= tainty whilst party negotiations go on could fuel market volatility. I= t is also important that Brexit negotiations, due to start on Monday 1= 9 June, are not delayed significantly, given the magnitude of the task= . The ongoing political uncertainty will also remain an ongoing risk =E2= =80=93 coalitions or minority governments are inherently less stable t= han outright majorities, making a full five-year term much less likely= . Current Prime Minister Theresa May is also likely to come under a lo= t of pressure based on what is a disastrous result from her party=E2=80= =99s point of view =E2=80=93 if she stays on, a leadership challenge i= s likely to be in the back of people=E2=80=99s minds constantly.
Taken together, there is every reason to believe sterling will remain = range-bound near current levels =E2=80=93 lower than when the General = Election was first announced given the ongoing political uncertainty, = but higher than the post-Brexit depths on the softer-Brexit outlook. T= he legislative and fiscal outlook remains business friendly, whilst th= e fall in sterling will boost overseas portfolio exposures, and we exp= ect our UK equity funds to benefit from the translational effect of ov= erseas earnings in underlying companies.

3D=
=20 =20 =20
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3D=

In conclusion

3D=
Whilst highly relevant to UK investors as citizens, the overall impac= t of this election result is minimal for the portfolios that we manage= . Our philosophy and process favours diversifying geographically as we= ll as by asset class, and the drivers of long-term performance will be= the larger macroeconomic themes and global market dynamics that we di= scuss in other publications, and which local UK politics are very unli= kely to have a material impact on.

Where there is an impact, mainly through UK equity exposure, we have a= constructive outlook for the market, which itself benefits more from = the global economy than the domestic economy, and where we favour mana= gers who are able to find high quality and value-adding companies. =20

We hope you have found this election update helpful. Please do get in = touch if you have any questions or would like more information.

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Connect with us

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