LONDON: The jury is still out on whether a solid Conservative win in next month’s U.K. general election will soften Brexit’s blow for markets. But that hasn’t stopped equities from rising on speculation of the vote outcome. The FTSE 350 Index of U.K. stocks has climbed to fresh records four times in the past week, gaining after an initial knee-jerk slide on the day U.K. Prime Minister Theresa May announced the June 8 vote. With polls showing the Tories ahead by 20 percentage points, investors are betting Britain will have a stable government in place, with more room for May to maneuver its exit from the European Union.
Investors may be returning to the “U.K. more as they had prepared for the worst and things have not been quite so bad,” said Steve Sherman, a London-based fund manager at BNP Paribas Investment Partners, which oversees about 580 billion euros ($642 billion). “Investors dislike uncertainty and so an election that strengthens whatever party is in place is generally pleasing for investors.” There is a long tradition of a bullish run-up to U.K. elections where a clear win for either party has been forecast, regardless of who the expected winner is, according to a note by Schroders Plc earlier this month. Stocks also mostly advance when either party manages to capture a clear majority.
