Does the UK election outcome clear any Brexit fog? - Spanish market responds

Eugenia Jiménez
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Does the UK election outcome clear any Brexit fog? - Spanish market responds

SPANISH MARKET REACTIONS

Following the election, InvestmentEurope has been gathering a number of comments from the investment industry on what the election's outcome means for investors and for the Brexit process going forward.

Tomás García-Purriños, multi asset portfolio manager at the Andorran bank MoraBanc, said: "The comfortable majority in Parliament won by the Conservative Party in the election, paves the way for a quick resolution of Brexit.

"It closes some uncertainties, but it also opens some new ones."

García-Purriños continued: "UK Prime Minister Boris Johnson himself has said he intends to vote his Withdrawal Agreement Bill before the Christmas break. But this is not the end of Brexit, just the beginning of trade negotiations, which could lengthen over time.

"However, the slightest uncertainty is already weighting on the British stock exchanges and on the pound, which have experienced a remarkable rally. At the moment there are no compelling reasons to distrust its continuity, but there is not only Brexit on the table, there's also an increase in public spending during 2020 that could be a headwind for the British currency, that is no longer extremely undervalued.

"On the other hand, British monetary policy could be less expansive once these uncertainties are cleared. The mix is generally positive: financial markets have uncertainty. But we must not lower our guard."

Ignacio Dolz de Espejo, investment solutions director at the Spanish manager Mutuactivos, said: "The Tory party won a solid victory which, in their own words, gives them a strong mandate to "get Brexit done".

"First market reaction following the UK election outcome has been a pound bounce. We will also possibly see stock exchanges going up, but with more emphasis the UK companies than the global ones given the latest might be negatively impacted by the pound's appreciation.

"Meanwhile, Jeremy Corbyn's historic defeat - which has forced him to announce he will not be leading the Labour party into the next general election - could lead the US Democrats to ponder whether to propose "too left-wing candidates" is a good political strategy or not."

"In Scotland, the SNP's rise suggests a potential independence referendum to be held in the country once the UK is officially out of the EU."

Eugenia Jiménez
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Eugenia Jiménez

Eugenia Jiménez speaks Spanish and is Iberia Correspondent for Investment Europe covering Spain & Portugal, as well as Italy.