Market Round Up:  Workers Unite ✊ – Autumnal Market Outlook 🍂

by 24 Sep, 2018


1. Workers of the UK Invest!

In what may seem as a signal to unite workers against boardrooms across the country, Britain’s Labour Party has proposed that companies give 10% of their shares to staff.

Called an ‘inclusive ownership fund’, staff would receive £500 a year. Inevitably, the Conservatives and business bosses have condemned the idea as a ‘stealth’ tax and a put off for big investors that businesses need to attract. But how different is it from Germany’s successful mandate that all company boards have shop floor representation – something that Labour also wants introduced.

Worker participation and responsibility is a strategic must for many businesses (look at John Lewis’ envious staff partnership model). However, businesses are probably right in saying that Labour is going too far by effectively forcing companies to transfer 10% of a company’s ownership from existing shareholders; a sort of ‘nationalisation-lite’!

Either way, Labour is raising the right questions about employee stake-holding. However, it probably needs to go back to the drawing board if it wants businesses, and the public, on its side; and if it wants to be seen as a realistic option to the Conservatives come the next general election.

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2. Autumnal Market Outlook

China is enjoying a quieter start to the week on account of their public holiday for the Mid-Autumn festival. Liquidity will therefore be on the thinner side in Asia this morning, with both Chinese and Japanese traders taking a break.

Notwithstanding, trade wars are still front page news as an additional $200 billion in tariffs on Chinese goods took effect as well as retaliatory tariffs from Beijing on U.S. goods worth $60 billion. Neither one of the two economies have given any indication that they plan on re-engaging in trade talks and Asian markets have suffered a blow as a result.

Whilst Chinese and Japanese markets are closed, Hong Kong’s Hang Seng Index is down 1.25% ahead of the European market opening which took a bit of a hit after Friday’s surprising decline in manufacturing figures. So everyone will be listening out for Germany’s Ifo data due today, which is also expected to show a slippage in performance.

Meanwhile, U.S. stock markets have been remarkably resilient against developments on the trade war front as the U.S. economy continues to expand at a solid rate. But risk exists that the market will have to stage a correction if the spat with China continues.

Related:  Fear of a trade war is keeping markets subdued

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