Uncertainty Rules!
The fallout from Brexit, which had only just hit the newswires when Hedge Clippings went to print last Friday, continues, and what a shambles it shows democracy to be at times.
Of course, it was Winston S. Churchill who famously said that "Democracy is the worst form of government, except for all the others" although I am not sure he wouldn't reconsider that opinion given the uncertainty that not only the UK and Europe but also the rest of the world now faces. Of course, it's unlikely that had Churchill still been around that England would have joined the EU in the first place. It is even less likely that he would have fallen into the trap of leaving such an important decision to mere voters, particularly given the U.K.'s non-compulsory voting system which allowed a little less than 36% of those eligible to vote to carry the day.
We can't imagine that David Cameron will go down as a great British PM, and now Boris has pulled out of the race who knows what the outcome will be? The only definitive outcome is ongoing uncertainty, and uncertainty is not a friend of financial markets or economic growth.
Depending on which newspaper one reads in Australia, tomorrow's local election result is either going to be a cliff-hanger, or a win to Malcolm Turnbull and the Liberal coalition. Either way the worst outcome, although one that is quite possible, is that neither party will have the clear run or majority in the Senate to implement their stated policies. If you're on the side of the losing party of course this is probably seen as a positive, but from the point of view of strong government, and economic growth it will just lead to further uncertainty.
Whatever the result we can't see economic growth being anything other than lukewarm at best for the next three years as Australia, like the rest the world, will be impacted to a degree by Europe. And that's even before the potential for Donald Trump to make it to the White House following November's US election.
If that outcome eventuates any uncertainty will become a certainty.
Pengana PanAgora Absolute Return Global Equities Fund generated a positive 0.88% for the month of May. The Fund has a low systematic risk (beta) to the ASX200 and the MSCI World Indices of 0.07 and 0.08 respectively.
Insync Global Titans Fund returned +6.30% in May, outperforming the MSCI All Country World ex-Australia Net Total Return Index in $A which returned 5.5%, by 0.80%.
KIS Asia Long Short Fund returned -0.25% for the month of May, to take annualised return since inception to 14.70% p.a.
FUND REVIEWS released this week: Bennelong Twenty20 Australian Equities Fund; QATO Capital Market Neutral Long/Short Fund;
And on that note, try to have a great weekend working out not only the strange ways of the democratic World, but also the Australian Senate voting paper.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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