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Big money Wall St investment bank fund managers can influence billions of dollars in money and so it is worth seeing what they think about Brexit and 2021 opportunities, and what they think will happen to GBP and FTSE. Don’t forget to check out www.alpeshpatel.com to keep up to date with all my free resources and my free courses on www.trading-champions.com and www.investing-champions.com
JP Morgan Asset Management: Brexit and 2021 Opportunities
Karen Ward, EMEA chief market strategist for the asset management division
“So given past experience, there’s quite a lot of appetite to look through the saber rattling. Now, that may prove to be very astute and I think that’s my core scenario. And what I would say to clients is our core expectation is that we do get a deal, but we shouldn’t be complacent.”
“I think the one thing I would have more conviction on is that if we if we didn’t see a deal, and as I say that still might be a small probability, then it would be sterling weakness, and the FTSE 100 may not go up in absolute terms, but it would outperform the [FTSE] 250 to a degree,”
Wall Street Investment Banks and What They Think about Brexit and 2021 Opportunities: UBS
Kiran Ganesh, a Multi-Asset Strategist at UBS Global Wealth Management
“In a no deal outcome, we’d expect sterling to re-test the September lows of $1.28, while some certainty around a deal could see it reach $1.35 in the near-term, and we forecast GBPUSD at $1.37 by end 2021, under the assumption that a deal is done,”
“The UK, in our view, is one of the most undervalued markets globally with most scope to ‘catch up’ as the economy normalises, although it may require some more certainty around Brexit before overseas money managers gain the confidence to buy into the market,”
“UK equities are attractively valued relative to other markets from a longer-term perspective, so fund managers should also be looking for opportunities to build long term positions in the event of near term volatility potentially depressing prices,”
“We think no deal is still the less likely outcome so we wouldn’t advise explicitly positioning for a no deal outcome,” Ganesh said. “If fund managers want to position for it then short GBPEUR would likely be the purest expression they could take on, and implied sterling volatility being at the highest level since March shows that this is what a lot of investors are taking direction or hedge positions in.”
Goldman Sachs
Peter Oppenheimer, European and global strategist
“Our base case remains that a ‘thin’ free trade agreement (FTA) will be reached before the end of the year,” Oppenheimer said in a December 14 research note. “That said, there is plenty of uncertainty around this; the risk of a no deal outcome persists.”
“Around three-quarters of FTSE 100 sales are non-domestic and, all else equal, a rise in GBP is a negative for the index,”
“Thus, it is possible the index falls slightly (in Sterling terms) on news that a deal has been struck. That said, a deal would mean that the perception of ‘UK risk’ would likely fall, and this would tend to benefit FTSE 100 and offset some of the negative effects from the rise in Sterling.”
“We remain positive on UK equity: The market already looks cheap versus other assets and versus other major equity indices. Some of this discount is down to sector exposure but, looking sector by sector, most UK sectors are on a substantial discount to both Europe and the US,” Oppenheimer said. “… We remain overweight FTSE 100 versus SXXP given its compelling valuation and Value sector tilt, including commodity-related sectors. We see it as far less sensitive to Brexit outcomes than FTSE 250 or domestic stocks.”
Source: Goldman Sachs, UBS, JP Morgan, Business Insider
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