I don’t know about you, but I’m finding it increasingly hard to predict where markets will go next. I understand the logic behind the recent rise in equities – but not the certainty with which it’s being applied. We don’t know for sure what BREXIT or a Trump presidency means. So, I wondered…does this rally really signal confidence? Time to look under the hood…
This week’s blog comes from Alex Gaunt, Lead Partner in our Operational Transaction Services team. A dramatic fall in sterling has made businesses more attractive to foreign buyers. Companies will need to think about their options – but to keep those options open, they’ll need to focus on operational efficiency and innovation.
Anyone else with déjà vu? We’re clearly in the midst of seismic shifts in the political landscape that may be more fully realised next year after a run of major European elections. So, do we need to rethink…well…everything? What does it mean for the ability of companies to raise, preserve, optimise and invest capital if fundamental economic orthodoxies break down?
In the past few weeks we’ve published a number of reports that help to build a picture of the health, hopes and expectations of UK plc. It’s not pixel perfect, but it feels like a good time to take stock and pick out a handful of themes that we think will endure through autumn and beyond. UK plc is doing ok – better than expected in fact– but current performance is no guarantee of future results. As we found out today – we can take nothing for granted!
Obviously Brexit will have a profound impact on the shape of the UK economy and its relationship with the rest of the world. Given this fundamental shift taking place in the UK’s world view, it is understandable why this topic is dominating the capital agenda. But, this week, I also want to think about other dynamics that are driving UK deal volumes. Because, there are obviously forces in play that are encouraging companies to think about deals – whatever the uncertainties in the current outlook.
Takeaway: The IMF’s warning about global debt levels comes at a time when it looks like investors can’t seem to get enough of corporate loans and bonds– even if yields dip below zero. But there are increasing signs that central banks might be calling time – at least on further QE – and may even tighten policy as the pendulum moves back to fiscal stimulus. Sluggish growth will require central banks to keep their foot on the pedal to some extent, but what happens if they decelerate? Are last night’s events a sign of things to come?
Three months on and BREXIT still doesn’t appear to mean much yet on the surface. But these are very early days and perhaps we’re looking at more of a drag than a blow to the UK economy following this summer’s developments? This week we’re thinking about how the M&A landscape is shaping up – via these early indications – and our latest thinking in real estate. In summary: initial uncertainties are fewer than expected, but we can’t count our chickens and BREXIT isn’t the only show in town.