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Scotland votes no – but what does that mean for your portfolio?

19 September 2014

FE Trustnet sums up the fund management industry’s reaction to the Scottish independence result, which was not quite as close as many expected.

By Joshua Ausden,

Editor, FE Trustnet

Well it certainly had us worried didn’t it? Though sterling strengthened on the growing expectation of a “no” vote and volatility in the pound fell to the lowest level in 15 years, a number of fund managers were still holding their breath yesterday.

There were sighs of relief in The City this morning when the news came through that Alex Salmond and his party lost out 45 to 55.

The early signs for the markets are positive, with the FTSE All Share rallying by 0.75 per cent in early trading.

Here, a selection of fund managers and industry experts highlight the wider implications of the “no” vote for markets and economies:


Rick Eling, head of investment solutions at Sanlam

“Now that the result is known – and the UK has survived – we expect fundamentals to reassert themselves on prices. It was lost in the pre-referendum noise, but CPI fell again on Tuesday to 1.5 per cent, further weakening the argument for a rate increase.”

“The FTSE 100 has tried and failed five times in the last year to top 6,900: this clearing of the air may be enough to push it onto new highs.”

Performance of index over 1yr


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Source: FE Analytics


“Markets, above all, thrive on stability. Change and uncertainty always make it harder to project what an asset may earn in the future, which is the basis of all valuations.”

“While the independence campaign will be disappointed to lose, business leaders may now see that the time is right to restart capex projects delayed by the vote. Corporate Britain – north and south – continues to sit on plenty of cash. If they employ it wisely in a renewed United Kingdom then investors will benefit.”


Mark Dampier (pictured), head of investment research, Hargreaves Lansdown

“From an investor’s perspective, it is a relief to resolve this uncertainty and the markets look to react accordingly. ALT_TAG Investors can continue to manage their savings, investments and pensions just as they did before the referendum. The UK remains one of the most stable countries in the world in which to invest and conduct business.”

“As a rule, investors should not make knee jerk reactions to these sorts of matters. Companies have a tendency to survive whatever politicians and economics throw at them, just look at Europe as an example. Big falls and rises often come close together and investors on the side-lines risk missing out.”

“It remains business as usual – it's highly unlikely there will be any real devolution work done until after the general election, there will be plenty of time for companies to adjust to any changes, investors have no need to make quick decisions based in all probability on immediate analysis.”

“In the longer term there may be changes to investment rules and practices following further devolution but for now, the party conferences and the forthcoming general election will be the main focus of attention.”



John Greenwood, chief economist at Invesco

“First, on the financial front, the Scots will continue using the pound as their currency with no debate at all about this. This means that the economic recovery that has already taken hold in both Scotland and the rest of the UK can continue to gain traction.”

“The gradual repair of the two major Scottish banks – RBS & HBOS – rescued by the UK authorities can also continue. And there need be no concern over the possibilities of currency and capital flight, or the mass-exit of financial institutions.”

“Second, the Scottish economy can look forward to growth at near-maximum potential, shielded by the continuation of the longest surviving political, economic and monetary union in the world.”

“Third, instead of focusing on the alleged constraints of the relationship with the rest of the UK, Scots will be able to concentrate on raising their standard of living in the way only they know best – competing.”


Paras Anand, head of European equities at Fidelity


“Given the sense as we approached the referendum that the outcome was impossible to call, this perspective will carry over to the upcoming general election and, in the case of a Conservative government prevailing, the referendum on EU membership. Hence, we could expect to see an extended period of sterling weakness, especially relative to the US dollar.”

“This, we believe would be a welcome development for the UK corporate sector overall given the large proportion of revenues and profits that are earned overseas and hence supportive for the markets overall.”

“Moreover, whilst this atmosphere of political instability dominates, it is difficult to see how we will experience anything more than modest increases in short rates over the coming years which should, at the margin, be beneficial for the domestic economy overall.”


Azad Zangana, European economist at Schroders

"Westminster is now expected to devolve more power to Scotland after a late promise by the leaders of the major Westminster parties. Variability in tax rates may introduce distortions at a micro level, but should have little impact to the overall macro-economy.”ALT_TAG

“The result along with further devolution should mean that another referendum is very unlikely in the foreseeable future. However, long-term investors will be minded of the risk of separation and may demand a premium for undertaking fixed asset investments in Scotland going forward.”

“Continuation of the union also means the risk of UK exit from the European Union has been reduced, although it does remains significant. Scottish residents are more in favour of remaining in the EU, compared to the rest of the UK where the majority favour an exit.”

“Overall, major disruption has been avoided and focus can now return to building on the strong economic recovery in progress. The Bank of England is now likely to press ahead with raising interest rates early next year in the absence of political uncertainty.”



Alan Wilde, head of global fixed income at Baring Asset Management


“Sterling has taken the bulk of pressure and a recovery to $1.65 or so seems plausible though upside potential may be limited as sterling has actually been stronger than other major currencies such as the Euro and Yen.”

“For Gilts, which have outperformed US Treasury bonds, there could counter-intuitively be some downside with the Referendum out of the way: one consequence of a Yes vote was that Bank of England (BoE) Governor Carney was expected to go slowly tightening UK rates.”

“This outcome may now lead markets to focus back on growth and conclude that the UK economy needs some modest restraint and that the BoE will be ahead of the US Federal Open Market Committee raising official rates.”

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