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The bitter internal disputes between conservative politicians over Brexit have increased the chances of an early general election in the UK, which could oust Theresa May from Downing Street and give the number 10 key to Jeremy Corbyn, leader of the Labour Party.
Corbyn's radical plans for the UK economy have attracted few fans in London, with many investment managers privately worrying deeply about Labor's agenda.
Richard Buxton, managing director of UK-based fund company Merian Global Investors, weighing £ 34.6 billion, says the UK stock market would not respond positively to Corbyn's electoral victory.
"The prospects of a higher corporate tax will be considered negative. One could assume that the market could provide for a further increase in the bank levy, as well as higher corporate taxes. "
Buxton is also concerned that the wealth and savings sector could suffer a "noticeable decrease" in growth if a Labor government imposes higher taxes on higher incomes or imposes a tax on wealth. the wealth.
Ladbrokes offers ratings of 12/1 on general elections held before the end of this year. The bookmaker predicts an election in 2019 at 2/1, although the next vote is not due until 2022 under the Parliament's Fixed Term Act.
Rupert Harrison, portfolio manager at BlackRock, the largest fund group in the world, said clients were asking as many questions about the possibility of a Corbyn government as Brexit.
"Investors are very focused on the risks of a Corbyn government, particularly the commitment to reverse some of the significant corporate tax cuts implemented in recent years. This would be clearly negative for the stock market. "
The Labor Party has promised to renationalise the British railways, the water and energy companies and the Royal Mail. He also suggested that investors might not receive full compensation if these companies were brought under government control.
"In practice, the courts would make it difficult for a Labor government to under-compensate, but Corbyn's plans to renationalize water distribution companies and rail franchises have created uncertainty for investors." Said Harrison, George Osborne's chief of staff, Chancellor of the Treasury.
Buxton said mergers and acquisitions could become difficult if a Labor government imposes restrictions on foreign buyers pursuing British companies.
"It could weaken some actions when the opportunity to participate in the global consolidation is being taken into account," he said.
The uncertainty of the Brexit and the possibility of a Corbyn victory have raised confidence in the outlook for the British stock market to a record low at the beginning of the year, according to a survey widely followed by Bank of America Merrill Lynch. The sentiment has improved slightly in recent months in the hope that an agreement on Brexit will be reached with the EU.
"UK stocks are already very badly received by global and domestic investors, so the chances of disappointment are a little less than if we leave somewhere else," said Matthew Jennings, director of investments at Fidelity International.
The FTSE 250 domestic market index fell 13.9% from its all-time record on June 14, while the blue-chip FTSE 100 fell 11.9% from its record close of 22 may.
Mr Jennings said that a blind sale of British and sterling shares posed a risk in the event of a Labor election victory. However, he adds that such a scenario would also create opportunities for stock pickers and long-time investors, as Mr. Corbyn may have trouble getting Parliament's approval for the most radical parties of his program.
Pieter Jansen, a senior multi-asset manager at NN Investment Partners, the Dutch asset manager, believes Corbyn has "a good chance of success" at the polls.
According to him, a victory for Mr. Corbyn could initially provoke a positive reaction from the financial markets, because a Brexit of work could be sweeter and more user-friendly. But he thinks Labor's economic agenda will not find favor with investors.
John McDonnell, the Chancellor of the Shadow, has the idea that all major British companies pay one-tenth of their equity to the workforce. Each employee would be allowed to earn up to £ 500 a year in dividends with any surplus, which should amount to billions, handed over to the government.
The plan, which has shocked business groups, echoes Gordon Brown's 1997 decision to remove tax relief on dividends paid to pension funds.
Such an operation would reduce the attractiveness of the UK stock market as a source of income for domestic and international investors.
"We would anticipate a market turnaround after an initially positive reaction to the prospect of a moderate Brexit," Jansen said.
An Opinium / Observer poll, published in mid-October, showed that Corbyn's personal approval rating of less than 20% was lower than Theresa May's 17%, despite the growing threat of Brexit prejudicial.
Recent polls on voting intentions showed that the Conservatives were keeping ahead of the Labor Party.
Asset managers, however, know that sentiment can change quickly.
A fund manager who did not wish to be named said: "Current opinion polls suggest that the Labor Party would have a hard time getting an absolute majority in parliament. But if the polls begin to change in favor of Mr. Corbyn, we could see more volatility in the stock market and the pound. "
