‘Sell in May and go away’, runs the old stockmarket adage – but what happens when May involves a UK General Election?
The next General Election is scheduled to take place on Thursday 7 May 2015. However, the result of the election – whether an outright victory for one party or some shade of coalition – is far from inevitable and uncertainty remains the sworn enemy of investors.
The outcome is widely expected to be close and, as May approaches, investor sentiment is likely to be affected by this mounting uncertainty. Nevertheless, it is worth remembering the UK equity market tends to rise in election years. Of the seven General Elections held since the beginning of the 1980s, the stockmarket has ended the calendar year higher in six cases – falling only in 2001.
Many questions about the UK’s future remain, as yet, unanswerable. Will we end up with another coalition? What can companies expect from the next government? What will happen to the housing market? Should the banking sector brace itself for further punishment? And what role will the UK play in the EU?
Meanwhile, the outlook for the eurozone’s faltering economy and the future path of oil prices have continued to create headlines. Looking ahead, however, speculation about the outcome of the General Election and the UK’s future prospects is likely to gain momentum.
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