Today, CEO of one of the worlds largest independent financial advisory organizations in deVere Group has given a warning to British business, despite the Boris Bounce and Brexit.
The FTSE 100 saw a very strong start to the week of trading yesterday, as all firms bar four saw their shares boosted across Monday trading.
Dubbed the ‘Boris Bounce” many firms saw their shares rally after the landslide Conservative win on Friday.
Notable winners included the British Banking business sectors where Lloyds shares have jumped 6.4% to 65p on the election results.
Additionally, Barclays PLC shares rallied 7.77% to 185p on Friday, whilst Royal Bank of Scotland Group plc saw their shares spike 10.69% to 257p.
Another noteworthy winner was the homebuilding sector, where many businesses saw shares in green.
Taylor Wimpey saw their shares rally 14.88% to 200p, who happened to the biggest rise on Friday.
Berkeley Group Holdings PLC (LON: BKG) shares spiked 13.06% to 5,102p despite the timid update provided a few days ago.
However, it seems that the optimism from Friday’s election results is beginning to fade as markets restore normality and businesses continue to see their shares up and down.
Nigel Green, chief executive and founder of deVere group said that PM Johnson could spook financial markets in 2020.
Green added that investors must avoid complacency in what still seem to be uncertain times for British business.
Nigel Green affirms: “The decisive win for the Conservatives triggered one of the pound’s biggest ever rallies, the FTSE 250 index of UK shares climbed by 3.6 per cent and the FTSE 100 rose 1.3 per cent.
“On Monday, European stock markets reached all-time highs.
“This has been driven in part by investors’ relief that a hung parliament had not been delivered, meaning years of uncertainty and indecisions over the UK’s way out of the EU is coming to an end. Also, perhaps, because the Conservatives promised a more pro-business agenda.”
He continues: “But Boris Johnson now has the daunting task of turning his powerful election campaign slogan of ‘Get Brexit Done’ into reality.
“When Britain leaves on January 31, there will be only 11 months to thrash out the basics of the future relationship with the European Union.
“The self-imposed end of December 2020 deadline is a mammoth challenge or Britain will fall through the ‘trap door’ of no-deal Brexit on January 1 2021.”
The Prime Minister could request another extension for the transition period. The government has until 1 July 2020 to agree with the EU a one-off extension, until the end of 2021 or 2022.
But, says Mr Green, this is unlikely. He notes: “I don’t believe that Johnson will use his significant majority to slow down or soften – the Brexit process.
“Instead, his assumption from the election outcome will be that people want quick, easy answers.
“Indeed, in an interview on Sunday, Michael Gove guaranteed that the Brexit transition period will not be extended.”
He goes on to add: “The task ahead is monumental. The time frame in which to complete it is narrow. Failure to agree a free trade deal by the end of next year will mean the UK crashing out of the EU and all the far-reaching negative economic implications, including the likelihood of a recession.
“With such uncertainty, following the election bounce, in 2020 investor confidence in the UK is likely to remain subdued and Boris Johnson’s Brexit stance could be a major source of volatility in financial markets.”
The deVere CEO concludes: “Despite the markets currently surging, investors must avoid complacency.
“2020 promises to be a year in which political factors – including Boris Johnson’s Brexit plan and the U.S. presidential election, amongst others – could potentially spook markets.
“Investors should assess and, where necessary, rebalance their portfolios to take advantage of the potential opportunities and to mitigate the risks.”
The risk to investors is still present, and despite some of the clarity which has been given following the UK election results, many issues are still cloudy.
As Brexit negotiations will continue to unfold as the newly elected Conservative Government tackles these issues, the market will be cautious as nothing is certain as of yet.
