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Analysen 12.06.2017

UK elections - Political challenges continue

UK elections - Political challenges continue

The disappointing outcome for UK Prime Minister Theresa May’s Conservative Party suggests a fragile political backdrop as the British government enters negotiations about its exit from the European Union.


We expect a weak British pound to shoulder much of the policy burden in cushioning the UK economy from Brexit.

UK fixed-income investors should be cautious, given low real yields and tight corporate spreads. Although sterling-referenced equity investors may benefit from globally-exposed, large-cap UK equities, we continue to prefer continental European equities to their UK counterparts.

Key points 

  • Even in coalition with the Democratic Unionist Party (DUP), the standing of the Conservative Party in Brexit negotiations will be challenged 
  • We expect sterling to shoulder a disproportionate share of the burden in helping the UK economy adjust to a post-Brexit world 
  • Low real interest rates and tight spreads suggest modest fixed-income returns for UK fixed-income investors 
  • Alhough UK equity investors should benefit from globally oriented, large-cap exposures, we continue to prefer continental European equities to UK corporates

LOK Michael.jpg

Michaël Lok
Group CIO and Co-CEO Asset Management

Norman Villamin-1.jpg

Norman Villamin
CIO Private Banking

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Patrice Gautry 
Chief Economist

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