2016 has been a momentous year
for the UK following the Brexit vote in June 2016. The immediate reaction from
the UK public and the markets was one of shock – however, subsequently to this
we have seen many markets recover significantly, with UK Equity funds seeing an
uplift of approximately 10% at the time of writing.
Other areas, such as commercial
property, initially did not fare so well, and we saw suspensions or fair value
adjustments on many funds in this sector. These restrictions are now being
removed by most funds.
With some respite being achieved
towards the end of summer 2016, and looking forward to the balance of 2016 and
into 2017, the question has to be raised - "Where to now?".
The balance of 2016 is not going
to be without its significant highlights. The obvious main contender would be
the US presidential election which will occur at the beginning of November and
this is going to be a closely fought - and some would argue rather scrappy – election,
with both sides attracting much support but also negative comment. It will be
interesting to learn the result and to observe the subsequent fallout.
New to the agenda is the Italian
referendum called by Italy’s Prime Minister, Matteo Renzi, which is due to take
place on 04 December. Although this is effectively only a referendum on
constitutional reform, many are seeing it as a referendum on the tenure of the
current Prime Minister, and possibly another signal that Italy, as a member of
the European Union, may not be content with its current progress.
It will also be interesting to
see how currencies such as the US Dollar, Sterling and the Euro are affected by
these changes as the remainder of 2016 rolls out. 2016 will certainly be firmly
on the investment agenda as a year of change and, some might argue fairly,
controversy.
Focusing on the UK, we have a new
Chancellor of the Exchequer in the form of Philip Hammond MP, and he will
deliver his first Autumn Statement on 23 November 2016. I, along with many
financial planners and investment managers, will watch this with interest to
see if the strategy and policy for the new incumbent of the UK Government
remains unchanged or seeks new paths. We have seen the Bank of England base
interest rate fall from 0.50% down to 0.25%, with some indicating that we should
anticipate further rate falls before the end of 2016. Also of note is the
program of quantitative easing continuing as an economic tool to help smooth
the UK forward following the summer, although struggling in some markets to inject
the capital they require for their purposes through the planned purchase of
assets.
We live in changeable times and I
have no doubts that the balance of 2016 will keep financial planners and
investment managers on their toes. We look forward to 2017 and the southern
committee of CISI is already planning a dynamic program for 2017 to focus on
some of the points noted in this blog, amongst others, to ensure that all have
the opportunity to gain insights to help our businesses move forward.
The next CPD event for the CISI
Southern group will take place on the late afternoon of Wednesday 16 November –
please save the date. Further details will be circulated by email soon.
Keith G
Churchouse BA (Hons), FPFS
Director
Chartered Financial Planner
CFP Chartered FCSI
ISO 22222 Certified