Podcast  

Election result tipped to benefit FTSE 250

 

The FTSE 250 is likely to outperform the FTSE 100 over the next few months following yesterday's general election result, experts have said.

Yesterday (December 12) the UK voted overwhelmingly for the Conservative party, boosting the party's position in the House of Commons by nearly 50 seats and providing its leader Boris Johnson with a majority of at least 78 MPs.

Speaking on the FTAdviser podcast, Shamik Dhar, chief economist at BNY Mellon Investment Management, said he expected small to medium size businesses to benefit most in the coming months from the Conservative's big win.

Mr Dhar was discussing the potential outcomes of the general election with Leigh Himsworth, manager of the Fidelity UK Opportunities fund.

Mr Himsworth agreed small to mid caps would be the biggest beneficiaries in the aftermath of the result as the fact MPs could "get on with the day job" would help the UK corporate sector.

He said: "A lot of companies are not affected whether we're in or out of the EU because most businesses conduct themselves on a local basis.

"Yes, the very large companies are affected but the removal of uncertainty is a very good step for small to medium businesses."

He said the UK and the EU "arguing at the fringes" about certain legislation could affect larger companies who were more globally focused, but that for the average person they could now invest in "hiring new people" or "getting that new office".

Mr Dhar also thought the future looked "pretty rosy" for UK risk assets for the coming year at least as UK assets had been "pretty beaten up" and were currently cheap. He thought the boost from sterling and the reduced uncertainty would help such assets.

Mr Dhar and Mr Himsworth also discussed the possible implications on inflation, the pound and interest rates as well as looking at which sectors were most likely to be affected by the result in the coming months and years.

To listen to the full podcast, click on the link above. FTAdviser's podcasts are available on Acast and are also available to download on iTunes.

Each week, FTAdviser is joined by guests from the industry to discuss pressing industry issues.

imogen.tew@ft.com

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.