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29/10/20193 mins

Brexit ‘Trick or treaty’

Ancient corridors haunted by despairing, ghost-like figures; howls rising from a distant chamber. Such are the scenes at Westminster, where that elusive beast – a Brexit resolution – plagues parliamentarians.

To MPs, the Brexit debate must be a cross between Groundhog Day and Night of the Living Dead. Successive deals have bitten the dust – perhaps MPs found them about as appealing as a zombie’s leftovers. In three years, Brexit has devoured two prime ministers so far, and when it comes to investors, fatigue has long since set in. Political brinkmanship and scaremongering have contributed to a climate of fear and uncertainty, leaving both sterling and UK stocks lying in a pool of blood.

Day of the Dead (deal)

Some have thought there’s more chance of seeing Frankenstein’s monster on the next series of Love Island, than a Brexit deal. But, even though the Halloween deadline for the UK’s departure has been extended, there may be an end in sight. As things stand, a ‘no deal’ outcome is less likely, which should improve the prognosis for UK stocks. Overshadowed by the spectre of Brexit, valuations of UK companies continue to reflect significant bad news.

Any positive development regarding Brexit, could provide relief to UK stocks. Domestically oriented companies could be particularly well placed to recover lost ground, having been shunned. More importantly, long after the Brexit uncertainty has been resolved, there will still be opportunities (and pitfalls) for stockmarket investors. As contrarians, our job is to be dispassionate and to look past short-term influences, to unearth attractive investments for our shareholders. That’s why it’s business as usual for us this Halloween. The ghouls and fools can come and go – when they buy high, we lie low.

Please remember that past performance may not be repeated and is not a guide for future performance. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations. You may not get back the amount you invest.

The Scottish Investment Trust PLC has a long-term policy of borrowing money to invest in equities in the expectation that this will improve returns for shareholders. However, should markets fall these borrowings would magnify any losses on these investments. This may mean you get back nothing at all.

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