More than half of fund selectors at Portfolio Adviser’s South West Congress event have said they would cut their exposure to the UK in the event of a Labour upset in the next general election though most are banking on Boris Johnson to bring home a win.
A poll conducted among delegates during the opening session of the conference, chaired by Last Word Media group editor Julian Marr at the Manor House in Chippenham, showed more than half of delegates (57%) would slash their exposure to the UK economy in the event Jeremy Corbyn leads the next government.
This compares with 55% of respondents who said they would boost their domestic exposure if Boris Johnson remains in place.
Most of the South West fund selectors (81%) believe Johnson will stay in 10 Downing Street after the general election on 12 December compared with just 3% who think Corbyn will emerge victorious.
Who are wealth managers voting for?
When asked which political leader was the “most market-friendly” at Portfolio Adviser’s event not a single fund selector voted for Corbyn. The current prime minister was the clear favourite in this category, receiving 71% of the votes, followed by Lib Dem leader Jo Swinson who got 29%.
Fears over Corbyn getting into power alongside Brexit and a weaker outlook for sterling have already spooked investors into pulling £4.6bn from equities during Q3.
Around two thirds said they plan on voting Conservative in the next general election compared with 22% who are voting Lib Dem and 7% who are plumping for Labour.
None plan on voting for the Nigel Farage-led Brexit Party.
PA South West Congress attendees see red over Labour
Despite the perception Corbyn is bad for business, 14% of delegates said they would boost their exposure to the UK if Labour won a majority.
The poll result threw some delegates for a loop.
“I genuinely don’t see how you can consider voting for the current Labour party under Corbyn and his totally anti-business policies and with a straight face go and see clients and advise them to invest in the UK,” said Shore Financial Planning director Ben Yearsley.
“If Labour got in, I think it would be pretty disastrous early on,” mused Skerritts head of investments Andy Merricks, another delegate at the event. “It depends how long they’d be in government, how much damage they’d be able to do. But it wouldn’t be good for the UK market.”
Brexit continues to weigh on UK positioning
Merricks is among the delegates who said they would not change their allocation to the UK in the event of a Labour majority (29%) or a Conservative majority (45%) until there is a steer on the Brexit situation. He has had zero exposure to the UK market since the EU referendum.
“Any certainty with Brexit, in or out, we’d be increasing our exposure because I think there’s a lot of pent up opportunity in the UK,” he said.
Yearsley said a Tory majority should bring greater Brexit clarity, which should be positive for domestic stocks. In turn he thinks this will bring overseas investors who have been shunning the UK back into the market.
More than half of the delegates (55%) predict the Conservatives will win a minority compared with 38% who think Boris Johnson will be able to snag a majority. Only 7% think the upcoming political contest will end with a Labour majority.
Brexit can could keep getting kicked down the road
Fund selectors were split when it came to pinpointing when the UK will leave the European Union.
While most respondents (40%) believe Britain will exit sometime in the first half of next year, one third of fund selectors said they thought Brexit would never happen.
“I don’t know how tongue and cheek that was, but I think people are getting so frustrated with it and I think there is a bit of a belief the can might just get kicked down the road,” said Gavin Haynes, co-founder of Fairview Investing.
Another 13% think the UK’s split from Europe will occur in the second half of 2020 and 19% think it won’t happen until early 2021.
