The markets have been volatile this year and political uncertainty is a contributory factor. It looks to be an interesting year, particularly for the UK and the US, though the impact of these events will be global.
- BREXIT? - the date is set for the EU referendum as 23rd June. Expect the “stay in” and the “get out” campaigns to step-up a gear as we get closer. We expect to “stay in” – membership of the EU is important for big businesses and the UK financial services industry as well as for Britain’s global standing.
- US Elections – not until November but the primaries are already underway and candidate selection remains uncertain though Trump is, unbelievably, a clear leader now in the Republican race. Much can change before November.
- UK Local Elections – will be held in May along with the London Mayoral election and should indicate whether Jeremy Corbyn’s Labour has support. If not, more division within the Labour Party will ensue.
Uncertainty leads to volatile markets and we are prepared for this. We constantly monitor our exposure to all asset classes to ensure we are best placed to take advantage of any opportunities. This includes purchasing protection for client portfolios, to smooth the ups and downs. This year has already been very successful for our options trading strategies.
Plenty of other issues persist and will continue to add to market volatility:
- Brazil – shrinking economy, rising inflation, presidential impeachment attempts, corruptions – all this and hosting the Olympic and Paralympic Games with global health concerns over the Zika virus.
- Ongoing Southern Europe migrant crisis.
- North Korea flexing its nuclear capability muscles.
- Islamic State group and its presence in Syria, Iraq, Afghanistan and more.
We will, as always, be ensuring that our client portfolios are carefully risk managed throughout these periods of market uncertainty.
Caroline Shaw CFA, MEng (Hons), Dip PFS, IMC, Chartered MCSI
Head of Fund & Asset Management
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