Jeremy Corbyn: champion of investors

The markets don’t appear to be dreading the most left-wing Labour leader in a generation as much as you might expect.

On election day, it’s particularly clear that I’m not a native of Britain.

Walking past newsstands on my way to work today acted as a powerful reminder that Brits do things differently.

As someone from the continent I’ve got used to drinking tea with a drop of milk, putting crisps on a sandwich and looking in the right direction before crossing a street.

But what I still can’t see as ‘normal’ is the blatant partisanship of British newspapers.

The Dutch newspapers I grew up with have a political leaning, sure. But there are no editorials giving out voting advice, nor are there full on personal attacks on politicians.

The fact that newspaper ownership is so heavily concentrated in this country should be a cause for concern.

It surely doesn’t do the democratic process any good when media magnates decide to wield their power to influence elections and act as a mouthpiece for political parties.

In this sense I have to agree with A.J. Liebling who observed that ‘freedom of the press is limited to those who own one’.

Anyway, as incredulous as I may find it that newspapers like the Sun, the Mail, the Mirror and the Express tell you how to vote on their front page, it’s sadly nothing new.

What’s surprising is that the issue that’s eclipsed all other issues in the past few years played a remarkably small role in this election.

Where was Brexit?

The Liberal Democrats bet big on the 48% who voted ‘Remain’, promising a second referendum and targeting constituencies that overwhelmingly voted to stay in the European Union.

But with Brexit in the background that tactic doesn’t seem to have come off. The election once again turned into a two horse race between the Conservatives and Labour.

Issues like security, taxes, and cuts took prominence and so it never became the Brexit election that many were expecting.

For the markets, however, it’s a different story altogether.

For the markets it is a Brexit election

You only have to read this unlikely headline in today’s Wall Street Journal to realise that party stances on Brexit do matter to the markets:

“In the UK election, many investors want the tax-raising socialist”

While a Conservative majority is usually the preferred outcome for the UK markets, the article states that Britain’s exit from the EU has made that no longer an absolute truth.

The effects Brexit might have on the UK economy in terms of potential trade barriers and a weakening of the financial sector is weighing on investors’ minds.

Many investors are said to be more worried about Britain leaving with a bad Brexit deal or no deal at all than they are about rising taxes or nationalisations.

“The Conservative’s harder line on Brexit means that some of these fund managers argue their investments, in the longer run, will do better if Mr Corbyn’s Labour win or end up leading a coalition government with pro-EU parties.”

It doesn’t mean that all investors have suddenly turned into ‘Corbynites’ of course. Even if investors generally prefer a soft Brexit, the markets are expected to take a clear hit if Labour unexpectedly comes out on top.

“Analysts predict an immediate fall in the pound should [Corbyn] win and big declines in UK shares, particularly utilities.

“Labour’s plans for increased fiscal spending could also send the yields on UK government bonds higher if, as expected, it pushed up inflation, driving the Bank of England to nudge up interest rates earlier than expected.”

Even if markets are a bit jittery about Brexit, I still imagine most investors hope for a Conservative landslide with Theresa May taking a softer stance on Brexit.

But it is interesting to note that the markets don’t appear to be dreading the most left-wing Labour leader in a generation as much as you might expect.

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