Riverside Blog

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The polls turned out to be accurate this time, as the Conservative party won a majority which keeps Boris Johnson in 10 Downing Street.

The Tory campaign focused heavily on “getting Brexit done”, and we expect this policy to be the priority over the coming weeks. The Prime Minister will now seek parliamentary backing for his withdrawal deal, so the UK can leave the EU without having to extend the latest Article 50 deadline of 31st January.

The Conservatives also proposed a range of policies which they believe will help the country move on after Brexit. They pledged to freeze income tax, National Insurance and VAT and retirement benefits including the state pension, winter fuel allowance and bus pass. They promised to increase spending on the NHS to cover the cost of 50,000 new nurses. The manifesto also allocated £500 million to improve the current childcare provision and committed to focusing on the environment in the first budget. It remains to be seen which of these policies the government will prioritise following the UK’s departure from the EU.

Brexit has weighed on UK shares since the referendum in 2016, and we think they are undervalued as a result. If the Prime Minister succeeds in ratifying his withdrawal deal, uncertainty should fade in the short term, allowing UK shares to rally and Sterling to strengthen against the US dollar. However, it is worth remembering that a ‘no deal’ Brexit is still possible at the end of 2020 if the UK and the EU fail to agree a free trade deal.


We favour UK shares within the mix of assets and regional exposures that make up your portfolio. Valuations of UK assets have drifted to levels that look attractive relative to other parts of the world. Even in the UK market, investors have shunned companies generating more of their revenue from domestic activity in favour of international earners. This has created an opportunity, so we not only prefer UK shares, but we have also tilted portfolios towards companies with a domestic focus. As the uncertainty surrounding Brexit subsides, we expect this positioning to help your portfolio’s performance.

As things stand, the outlook for shares appears reasonable. The slow but steady growth which the world has experienced since the financial crisis is still supported by a favourable economic policy backdrop. Entering 2020, the key question is whether companies can continue to grow in this environment.

The elections result brought no surprises, either for the markets or for us as managers of your money. Hopefully, the government can now secure parliamentary backing for the Prime Minister’s Brexit withdrawal deal and move on to negotiating a free trade deal with the EU.


The value of your investments can fall as well as rise, and you may get back less than you invest.