UK equities: end of the party?

Article Abstract:

Goldman Sachs forecasts a 5% rise in UK equity prices, followed by a fall before then end of 1996, with modest returns for 1997. The FT-SE 100 is likely to drop to 3,400 by year-end 1996. UK interest rates are likely to rise during 1997. Investors are likely to take the political risk factor of a Labor government into their pricing calculations, and this could be a catalyst pushing share prices downwards. An early election in Oct 1996 would mean risks should already be discounted in May 1996.

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Labouring under historical bunk

Article Abstract:

UK share prices could drop if the UK Labor party is elected in 1997, although Labor is expected to win and markets should have anticipated this. Share prices have often been associated with a Labor victory since 1945, according to research from Leeds University, England. The extent to which prices could fall is debatable since there is a stronger expectation of a Labor victory in 1997 than previously, and share prices over the long term are not related to short-term drops after elections.

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Labouring under election uncertainty

Article Abstract:

UK financial markets are likely to be affected by a forthcoming election which has to occur prior to May 22 1997 but could be held earlier. The UK Labor Party looks set to win the next election, and this may not affect share prices unduly. A surprise victory for the Conservative Party would probably boost share prices in the short term. The impact of the election is not likely to last long whoever wins, and fundamentals will have a long-term impact.

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