Following the unexpectedly strong election victory for Boris Johnson and the Conservative Party, some of GAM’s portfolio managers offer their views on how this is likely to impact markets.

Jeremy Smouha – Developed Market Credit

Our experience over the last few years of elections, including the referendum, has shown that elections affect currency markets first, then equity markets and credit markets least of all.

We expect that a Conservative government should have a relatively benign effect on credit markets. In particular, the credits we focus on have been performing well, as demonstrated by the latest reporting season as well as the latest Bank of England (BoE) stress tests. The BoE has subjected UK banks to extremely severe stress testing (scenarios far worse than the Global Financial Crisis) and all passed – which in our view demonstrates that UK banks can overcome a shock far worse than, for example, a hard Brexit. Insurance companies are similarly solid. Moreover, we are reassured by the resilience of the credit market after previous UK general elections and after the Brexit Referendum.



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