If you thought Brexit and President Donald Trump were seismicelectoral shocks, braceyourself for June 8. A victory for Prime Minister Jeremy Corbyn would be off the scale.
Corbyn surge
We live in strange times, where anything can happen. Safe and stable Prime Minister Theresa May started this campaign 20 points ahead, but the gap has narrowed to a soggy and sorry three points, according to this mornings pollin The Times. Incredibly, that is within the margin for error. It seems the many, not the few, could be lining up to vote forthe most left-wing Labour administration in history.
I still cannot quite see that happening, but these days you never know. The political world is shifting beneath our feet once again. The coalition of chaos is a distinct possibility. What on earth should investors be doing?
Marx and Spencer
You might expectthe FTSE 100to plunge atthe prospect of Corbyns Marxist sidekick, shadow Chancellor John McDonnell, runningthe nations finances. Yet it hasnt. Despite this mornings poll, and Mays humiliating no-show last night, the benchmark index is currently up 0.47% to 7,555,close to its all-time high. Royal Mail, in line to be nationalised, is up 0.5%. National Grid, also threatened, is merely flat. British Gas owner Centrica is up 0.3%.What does this mean?
It probably suggeststhat markets stilldo not believe that Corbyncan win. The City is banking on shy Tories showing up in forceonce again, proving pollsters wrong as they did in 2015. Either that, or a narrow Corbyn win simply doesnt scare them as much as the Tories would like. Thats despite the fact that businesses would facea major hike in corporation tax, resurgenttrade unions, and a rash of nationalisations. Executive pay would be taxed, squeezed, andtaxed again. It will hurt.However, a Labour government is alsolikely to meana far softer Brexit, with continuing access to the EU single market. Business will preferBrexit-lite.
Hold on tight
Corbyns shock poll ratings could begin to rattleinvestors if sustained in the final days of the election, andthe FTSE 100 could be in for a serious wobble. Nobody has priced his victoryin but that could change. Keep a close eye on the index next week, it could be a buying opportunity, assuming that you expect May will ultimately secure an ill-deservedwin. Markets are likely to rise on the news, although not ecstatically, with Brexit talks starting within days.
The aftermath ofaCorbyn victory on 8 June could also be a buying opportunity, for the brave. Asell-off is a racing certainty, so choose your targets carefully. Markets hate uncertainty and we have no idea what Corbyn would meanfor the UK economy. Higher taxes and heavier regulations will be a drag on UK company performance. On the plus side, a Labour winmight make those Brexit talks look less fearsome and overseas earningswill be worth more ifthe pounds sinks. A buying opportunity, yes. Whether you should take it is a different matter.
Brexit talks begin just 11 days after theelection. Whether you voted Leave or Remain, Tory or Labour, your portfolio will not escape the fallout.
This BRAND NEW special Motley Fool report sets out exactly what Brexit means for your portfolio, and how you can take advantage by picking up top company stocks at bargain basement prices.
Don’t just fret about Brexit any longer but click here to read this no obligation report all. It will be yours in moments and won’t cost you a penny.