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
Michaël Lok
Group CIO and Co-CEO Asset Management
Norman Villamin
CIO Private Banking
Patrice Gautry
Chief Economist