Brexit, The Economy and House Prices (Part 2)

Conrad

https://www.realworldinvestors.com/Posts/Read/1962/Is_this_the_beginning_of_an_MandA_boom_in_the_UK?s3campaign=content

Is this the beginning of an M&A boom in the UK?

20th June 2017 10:26 am

After a quiet year for M&A in 2016, particularly in the FTSE 250, Neptune’s Holly Cassell believes we could be in for a much busier 2017.

UK M&A activity is really gathering steam, with new deals being announced at an encouraging frequency. In fact, we’ve had the best start to the year since 2008, with total inbound and outbound British deal activity reaching a nine-year high. This has been particularly prominent in the mid-cap space, which has seen the lion’s share of the activity so far.


Is this the beginning of a bubble? We would strongly oppose this view. 2016 saw only one mid-cap deal complete, with the owner of Argos being acquired by Sainsbury’s.


The current momentum is the result of real pent-up demand in the system. Given these dynamics, we would expect to see M&A volumes in excess of market averages in 2017, particularly further down the market cap spectrum.


What are the catalysts?

Undoubtedly, a weak pound and cheap financing costs are the key drivers. But it has been almost a year since these factors first combined, so why now? We believe the initial falls in sterling may have caused panic; the pound was weak but many feared it would grind lower.


With the currency stabilising, businesses are now presented with a calmer backdrop supportive of increased deal activity. Whilst the outcome of the general election has created political noise, the shifting political landscape should not detract from the opportunity available; the UK has an abundance of quality companies which are attractive targets in their own right, whose valuations we believe now make them too good for overseas investors to ignore.


Recent deals have also acted as a vote of confidence in the UK domestic economy, further alleviating fears.

Thrugelmir

Conrad wrote: »

Recent deals have also acted as a vote of confidence in the UK domestic economy, further alleviating fears.

Selling the family silver can only last so long. All the UK will be left with is a load of overpriced houses. That no one can sell. As foreign investors won't lend money to advance mortgages to people who cannot afford them.

A_Medium_Size_Jock

Thrugelmir wrote: »

Selling the family silver can only last so long. All the UK will be left with is a load of overpriced houses. That no one can sell. As foreign investors won't lend money to advance mortgages to people who cannot afford them.

I can understand why you might have that POV - but the country has not significantly declined despite "selling the family silver" for the last fifty years or so, has it?
That is in large part because we are a nation of innovators, and have been for centuries.

I'm not, as I say repeatedly in these threads, suggesting that everything in years ahead will be a bed of roses but instead suggest the POSSIBILITY of maintaining and even increasing our economic outlook by promoting such innovation.
A Huffpost blog piece from a earlier this year suggests that more than me have such an opinion:

Britain has for centuries been a world centre for innovation. This has helped support our economy. Brexit provides us with a clear opportunity to ensure this continues. Post-Brexit, we can introduce differentiated business legislation that will support investments and innovations to help the country thrive.

http://www.huffingtonpost.co.uk/rebecca-emerson/legislate-to-innovate-sus_b_14958594.html

Herzlos

Innovation increasingly needs collaboration now, so we need to be careful that we don't cut off channels for international research and so on.

We're a long way away from the man-in-shed innovators of a few decades ago.

TrickyTree83

http://news.sky.com/story/juncker-slams-totally-ridiculous-eu-parliament-in-extraordinary-row-10936256

Sunshine, rainbows and unicorns on the continent, right?

Conrad

Herzlos wrote: »

Innovation increasingly needs collaboration now, so we need to be careful that we don't cut off channels for international research and so on.

We're a long way away from the man-in-shed innovators of a few decades ago.

Japan, S Korea, US, Australia, Canada.......... any of them having issues with innovation?

Herzlos

Conrad wrote: »

Japan, S Korea, US, Australia, Canada.......... any of them having issues with innovation?

Are any of them trying to cut off ties with local collaboration projects?

A_Medium_Size_Jock

Herzlos wrote: »

Are any of them trying to cut off ties with local collaboration projects?

Do any of them need such "collaboration" as the overtly bureaucratic EU in order to innovate?

A_Medium_Size_Jock

The UK is to introduce the EU "repeal bill" to parliament next week.

Legislation to begin the process of transferring European Union law into British law will be presented to parliament next week, Prime Minister Theresa May's spokesman said on Tuesday.

http://uk.reuters.com/article/uk-britain-eu-legislation-idUKKBN19P1F6?il=0

mayonnaise

Eurozone manufacturing upturn gains further momentum as PMI hits 74-month high.

https://www.markiteconomics.com/Survey/PressRelease.mvc/54e768dbc5ca4aa3a1a1ae052112f560

UK manufacturing growth slows at end of second quarter

https://www.markiteconomics.com/Survey/PressRelease.mvc/5c12cda5843a4817a8028785232865dd