Brexit is set to dominate UK market performance again in 2020. But the path forward appears clearer following the Tory election win, if not the full economic consequences of our departure from the European Union yet.
Next year also brings a US presidential election, which is likely to be a source of volatility even if Donald Trump strives to keep the economy buoyant to boost his chances of returning to the White House.
International investors remain lukewarm about UK markets, although indices made strong gains. Key themes from commentators are:
- The Conservatives’ overwhelming election victory is a game changer for investors in domestic assets given it brings certainty on Brexit policy.
- The consensus among investing experts remains that the UK is unloved, cheap, and poised to rebound.
- The economy has notably slowed and this may not turn around as quickly as some might hope. There may be some pent-up investment demand but much of this may stay on the sidelines while trade deals are negotiated.
- Investors are most likely to increase investments in the UK, Asia and emerging markets, according to a survey by AJ Bell of 1,400 of its customers.
- A separate survey found renewable energy was the top choice of affluent investors seeking long-term returns, with nearly one in three favouring the sector in 2020.
- Technology, commercial property and gold were also popular selections for potential gains over the long term, while mining, retail, industrial and auto stocks languished at the bottom of the list compiled by ETF provider GraniteShares.