Wealthy families are reluctant to invest in London before the election
Yogi Dewan, CEO Hassium Asset Management, analyses the UK election campaign.
How do you think the election campaign may affect how London is perceived by WM clients?
We are expecting a conservative coalition election win as are most of our wealthy clients and we suspect the financial markets. Note the UK markets are at record highs and the GBP has been strengthening vs the EUR as we approach the elections on the 7th May. Some of this strength is election related.
If over the coming weeks the election campaign suggests through the polls a Labour coalition win then this will have an impact on markets, sterling, and how wealthy families look at London. In addition to negative financial markets there will also be a negative impact on taxation as well as real estate investinginto London prime.
Are you noticing any clients being affected already?
Yes, very much so. Families are reluctant to invest in markets and sterling unless they have to. Any investing into London prime is also on hold but no decisions have been made to sell real estate until after the election results have been announced.
What do you think about the Crown dependencies being brought into the political debate about Wealth?
It’s important to remember that Isle of Man, Jersey and Guernsey are independently administered jurisdictions that are not part of the UK. They have always been part of the political debate directly and indirectly. Bringing them into the debate directly will no doubt be part of a labour campaign in an attempt to appeal to the average voter. In reality we see this as short term election noise with no real impact or substance.
What risk and upside do you see?
We see volatility in the run up to the election results as polls deliver mixed messages. There is also a risk to how various politicians do in the live television debate. We are expecting a conservative coalition election win. Consequently, we are overweight the UK and Europe. We are also overweight Sterling and see any weakness as a buying opportunity.
Would you say it is a foregone Conservative conclusion?
No but our base case, financial markets and sterling are suggesting a conservative coalition election win. We believe a labour coalition win would be very bad for UK financial markets and the pound.