Coutts experts point to bright future in wake of election result

Investment experts at private bank Coutts & Company have given their verdicts on how the country can prosper in the wake of the Conservative victory at the General Election with the consensus that the end of all the political uncertainty can be a huge boom.

Three of the bank's leading lights, which was founded in 1692 making it the eighth oldest bank in the world, Mohammad Syed, head of asset management, Sven Balzer, head of investment strategy at the bank and Alan Higgins, head of portfolio construction, were quizzed on how they see the post-election landscape.

They were first asked about what the election results mean to the country's economy. And Balzer believes markets are revelling in the Prime Minister Boris Johnson's election triumph because of the clarity it now offers with the added bonus that Brexit is set to be done, he says.

He said that with Brexit going to happen any scenario of a second referendum is off the cards adding that any no-deal Brexit is also not going to happen.

Finally adding: “This should encourage foreign capital back into the UK. Also, UK companies have held back on investing in their businesses for some time now, and there should be at least a partial recovery there. And there should be some fiscal stimulus coming. All of this, along with the more orderly path forward that we now have, should lead to a pick-up in the UK economy.”

Syed, meanwhile, believes from an investment perspective, the clear outcome of the election is very positive news for markets. He added: “We believe it creates greater stability for the country, stability that has arguably been absent since 2016.”

When it comes to the bank's investment approach, Higgins points out that it is worth remembering that Coutts is a global investor, adding that a balanced portfolio at Coutts is around 50 per cent invested in equities. Out of that 50 per cent, circa 20 per cent is invested in UK equities, so the majority is actually outside the country.

He added: “Within our UK allocation, we had tilted the portfolio towards more domestic themes and that’s worked well. We believe that the domestic and mid-cap holdings – the FTSE 250 – should continue to offer really good opportunities. If we’re right and the UK economy starts to improve, the strong performance we’ve seen from the mid-caps should be reinforced over the coming months.”

The impact on Europe was another topic of discussion and Balzer says that now that a no-deal scenario is off the cards, “all in all, that has a positive spill-over effect for Europe. European markets also reacted positively to the election news”.

Europe, to a large extent, is also dependent on how the world economy evolves, he says. "And we’ve seen some encouraging signs from China and some emerging markets. We’ve seen some stabilisation in our forward-looking indicators on the economic momentum in Europe, so we’re fairly positive on Europe going forward,” he concluded.

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