A decision tree for navigating Brexit uncertainty
Unchecked decisions at high levels were at the heart of the global financial crisis. Today, a decade later, there is a far sharper focus on how organisations are governed, with institutional investors expected to take a much more robust stance in calling to account the companies whose shares they own. As a leading asset manager, Rathbones takes its stewardship responsibilities seriously.
UK stocks have underperformed other major developed markets so far in 2018, extending a pattern that has been in place since the June 2016 vote to leave the EU. A longer-term analysis also suggests Brexit isn’t the only thing weighing on UK companies, so why should investors be interested in UK equities now? We think investors are pricing in a fairly negative Brexit scenario, and see UK shares as offering fundamental value and opportunity in differing economic outlooks.
The spectre of higher inflation and rising interest rates sent a shudder through global markets in February. It could still cause some sleepless nights over the rest of the year, but we don’t see anything too alarming on the horizon.
Passing on wealth has never cost the UK so much. Inheritance tax (IHT) receipts are surging and reached a record £4.9 billion last year. With property prices rising and IHT allowances frozen until 2021, that trend is likely to continue.
In a post-Brexit world, Britain may have to become less reliant on its financial services sector and the South East.
Interest rates and bond yields headed to the floor in the wake of the global financial crisis and have more or less stayed there since. In this “new normal”, generating a sufficient income may require new ways of thinking.
Investor sentiment had been extremely optimistic in recent months and markets overbought, but that is no longer the case.
The UK’s multinational companies got a big bang out of Brexit, but it was over quickly. Since then there’s been no meaningful difference in performance with their smaller and more UK-focused peers, despite the stream of negative press around Brexit negotiations.
