December 1, 2017
Earlier this week, Morgan Stanley published a report arguing that UK opposition leader, Jeremy Corbyn becoming Prime Minister, was a bigger threat to UK asset markets than Brexit.
MS saw a two thirds chance of a snap UK election in the second half of 2018 when UK can’t secure a satisfactory Brexit deal and the ruling Conservative party fractures. This could lead to a sharp swing in political support towards the far left, Corbyn’s ascension, a 32% crash in the Footsie 100 index, another big fall in Sterling, nationalizations and irreparable damage to free markets…basically heaps of bad stuff. The Guardian quoted from the MS report.
“From a UK investor perspective, we believe that the domestic political situation is at least as significant as Brexit, given the fragile state of the current government and the perceived risks of an incoming Labour administration that could potentially embark on a radical change in policy direction. “Against this backdrop, even if we see good progress in the Brexit negotiations, the scope for UK sensitive assets to rally may be muted, unless we also see an improvement in the government’s position in opinion polls.”
MS equity strategist, Graham Secker, handed out a warning for UK investors, which was reported by Bloomberg.
“If I am a U.K. equities fund manager, I am more concerned about a potential change in the domestic political government than I am about Brexit,” Secker said at a briefing Monday. “You need to think about tax rates going up, about nationalization, about an economic system which has favored capital over labor for last 10 to 20 years shifting to favor labor over capital.”
The MS comments received considerably media coverage and obviously raised the ire of Jeremy Corbyn, who responded in a videoreleased on social media. Corbyn begins his video message with.
“Bankers like Morgan Stanley…