The relatively similar tax and spending plans of the major UK political parties mean that asset classes in the home market could become more attractive to overseas investors, according to the guests on the latest FT Adviser podcast.
Hugh Gimber, market strategist at JP Morgan, said the “mini" Budget in September 2022 caused a rapid sell-off of UK government debt.
This then fed into a wider scepticism around the political and public policy outlook for the UK, causing bond prices to fall.
But now he feels that with the spending plans of the main UK and European political parties being “constrained”, there is potential for the US to suffer a lack of bond market confidence as a result of a political outcome, particularly if either presidential candidate embarks on spending rises or tax cuts.
Sunil Krishnan, head of multi-asset funds at Aviva Investors, said some UK asset classes in recent years may have suffered from an “excitement discount” as investors were spooked by the political outlook in the country.
But he feels that, for a couple of years at least, this excitement discount may dissipate.
Hiroki Hashimoto, senior multi-asset fund manager at Royal London Asset Management, said UK assets have been out of favour with international investors.
He feels confidence could improve, though he expects it to be gradual and that the assets to be impacted could include commercial property as well as bonds.
You can listen to the podcast by clicking the link above.
david.thorpe@ft.com
