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How the Snap Election Will Affect Your Share Prices

By Malcolm Stacey | Wednesday 19 April 2017


 


Hello Share Pillagers. We all should have known something big was going to happen by the way shares were marked down heavily after the Easter break. On Easter Monday, when our stock market was closed, the US version was open. During that session, American shares rose by about 1%. That usually means British shares rise in tandem, but not this time. 

The reason: uncertainty with the early calling of a snap election. But as Uncle Tom pointed out in his piece yesterday, the announcement of an election should lead to more certainty - or at least the very strong chance that the Tories will increase their seats.

A Conservative landslide will, of course, make it certain that Brexit will go ahead without the spectre of a second referendum. I’m not sure that leaving Europe is a good thing, for a lot of non-economical reasons: essential immigration, united defence and so on. But I am fairly convinced that Brexit will not harm business - and more importantly from our point of view - shares.

Indeed, since Brexit, the value of our shares is much higher than it was before the big vote. Now with a predictable general election in June, Brexit becomes even more secure. So the happy benefit for share prices should now continue.

There has, for example, been precious few examples of big foreign firms leaving their bases in Blighty. The pound has also crashed, making most companies richer, thanks to their payments in more valuable foreign currencies.

My prediction is that shares may languish a bit this week, as the election news sinks in. But then they will rise even more feverishly on the strong possibility that we will have a more powerful government.

Companies which rely on imports, like our supermarkets or travel companies, for example, may see diminishing share prices. But most of the Footsie giants, and loads of smaller concerns, make most of their gelt all over the world, not just Europe, and they should prosper under Brexit.

Though not all agree with me in the Punter’s Return.


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