Boris Johnson to become next UK Prime minister

Boris Johnson was announced today to have won the leadership contest of the UK Conservative Party. He garnered the votes of 92,153 party members, almost double the number of votes for his competitor, Foreign Secretary Jeremy Hunt (46,656). Tomorrow incumbent PM Theresa May will leave office after first seeing Queen Elizabeth to declare her demission, before Boris Johnson will enter Buckingham Palace to be formally appointed the next PM.

Highlights:

  • Today, Boris Johnson was announced to have won the leadership contest of the UK Conservative Party. He will replace Theresa May as UK Prime Minister (PM) tomorrow.
  • Johnson vowed to get the Brexit done on October 31 – “do or die” – but without presenting a clear concept. Over the next weeks, he is expected to tour European capitals for talks. We expect turbulent times ahead.
  • As the result of the leadership contest was widely expected, the British pound did not move much. EUR/GBP, close to 0.90, looks toppish, though in a worst-case scenario parity would be a distinct possibility (Hard Brexit unlikely, but risk may be as high as 20-25%).

Download the full publication below

BORIS JOHNSON TO
BECOME NEXT UK
PRIME MINISTER

RELATED INSIGHTS

CHINA’S Q4 GDP GROWTH SURPRISED ON THE UPSIDE, BUT RISKS TO THE OUTLOOK HAVE INCREASED
This morning, China published its Q4 GDP growth alongside with December monthly activity data. Q4 growth accelerated to 6.5% yoy which lifted total 2020 GDP to 2.3%. December real activity data were more mixed. While exports came in strongly, important domestic demand components were a bit unsteady.
COVID-19 FACTS & FIGURES
US President-elect Joe Biden has unveiled a $1.9 trillion stimulus package proposal. Following the recent increase in cases, China has imposed new restrictions and lockdowns in the Hebei province. Canada has implemented new restrictions and a provincewide curfew in Quebec that will last until February 8. German Chancellor Angela Merkel warned that the recent rise in Covid-19 cases could force the country to prolong the nationwide lockdown until April.
EQUITIES: STAY POSITIVE WITH A VALUE-CYCLICAL TILT
Following a monster rally in stocks last autumn, multiples are well above historical averages, but equity investors can count on lingering low yields, tighter credit spreads and increasing central banks’ balance sheets which in turn maintain low the cost of equity and the discount rate of future cash flows.