Share Prices & Company Research


03 January 2018

2017: The year of the disruptor?

David Loudon, Joint Chief Executive, takes a look at what 2018 may hold

2017 ended on an optimistic note, with the Santa rally extending past Christmas to help the FTSE 100 reach a new high on the last trading day of the year. Even the Pound, which saw various ups and downs throughout 2017, was at a three-week high on the morning of 29th December. Most global stock markets enjoyed strong gains during 2017, with the Vix volatility index, which measures the market’s expectation of volatility, at an all-time low.

Now that a new year has begun, for how long can we expect this period of optimism and calm to last?
When discussing events that are likely to shape 2018, the word “Brexit” inevitably crops up, as negotiations around the UK’s exit from the EU continue.

The former head of the Treasury, Nick Macpherson, has said “all is to play for” and the economic impact of Brexit should be limited if the UK government makes the “right choices”, including focusing on achievable outcomes in Brussels and pursuing a sensible domestic economic policy.

Talks have now moved on to the second phase, but there remains uncertainty around the timetable for Brexit negotiations. Autumn 2018 is when EU chief negotiator Michel Barnier has said the terms of Brexit will need to be agreed, but several issues still need to be worked out before then, including the divorce bill, the rights of EU citizens in the UK and the border between the Irish Republic and Northern Ireland. It looks like investors will be facing uncertainty for some time as the UK tries to negotiate its way out of the EU by 29th March 2019.

During this potentially complicated period, we’ll be keeping an eye on its impact on the Pound, which has been on something of a rollercoaster ride since the EU referendum result in June 2016. Theresa May has already promised to make “rapid” progress on the transition deal and that the government would seek a two-year transition deal, helping to “give certainty to employers and families that we are going to deliver a smooth Brexit.” This may provide a boost to Sterling if talks go as the Prime Minister hopes, but given the delicate stage we are currently at, there is little room for complacency - a lesson Theresa May learnt to her cost following the General Election results of last June.

In fact, challenge for the establishment has been a key theme throughout the past year, as one analyst has called 2017 “The Year of the Business Disruptor”. You only need to look at the rise of the likes of Uber, Lyft and Airbnb moving in on the established taxi and hospitality industries. Amazon cemented its status as a major disruptor in the retail world last summer when it purchased Whole Foods for USD $13.7bn. And who could have failed to have noticed the rises - and falls - of cryptocurrency Bitcoin?

It will be fascinating to see how the disruptors fare in the months ahead, and what other new innovations will challenge the status quo. The lesson, again, is never be complacent – and be prepared for the unexpected!
Wishing everyone a happy and prosperous 2018.

Investments and income arising from them can fall as well as rise in value and you may lose some or all of the amount you have invested. Past performance and forecasts are not a reliable indicator of future results or performance. Please note that this article is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.

2017: The year of the disruptor?
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