"Econews" with William Telkes
Every Wednesday, William Telkes, Spuerkeess' Chief Economist, comments on financial news from around the world, on RTL Radio Lëtzebuerg.
The political nature of the issue makes it exceedingly difficult to predict the result of voting. Also, in the event that Parliament rejects the agreement, the law provides for a new ballot to be organised within 3 days of the rejection for the purpose of submitting a plan B. Beyond that time, the final deadline of 29 March 2019 sounds the death knell on the UK’s status as a Member State: if the UK and Brussels cannot reach agreement and no extension is requested, the scenario of a “hard Brexit” will come down like a hammer blow.
Against a backdrop of uncertainty that looks set to last, the markets are expecting Parliament to show its opposition.
Similar to the turmoil in which the markets have been plunged over the past two years, such a stalemate could well fuel greater volatility. In addition, the UK would probably find itself on the road to another referendum on Brexit, the result of which would be no less uncertain. In practical terms, on European stock exchanges, equities in general and UK equities in particular would suffer from intensified volatility, pushing investors towards less risky assets.
Independently of the outcome of Brexit and the scenario that prevails, the allocation that we are using, which consists of remaining neutral on equities and bonds, is the best suited to prepare for any contingency.
Indeed, political decisions are difficult to predict and, with that in mind, an aggressive allocation would not be appropriate since it would be risky. As such, we will remain particularly attentive to the progress of forthcoming events so as to adapt our investments to the political decisions that will be put in place.