WEBVTT - Richard Wilson, Interactive Investor CEO on Saving the UK Stock Market

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<v Speaker 1>So as voting stations open in the United States, markets

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<v Speaker 1>are preparing for increasing volatility. In fact, we've seen slightly

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<v Speaker 1>reduced levels of trading for European stocks. Your stock six

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<v Speaker 1>hundred currently twenty percent below the average in early trading.

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<v Speaker 1>It also comes ahead of the FED decision, of course,

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<v Speaker 1>during power press conference on Thursday. Bank of England verdict

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<v Speaker 1>on the Chancellor Rachel Reeves's budget would also come later

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<v Speaker 1>in the week, but everything's being overshadowed by whether we

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<v Speaker 1>get clarity and how quickly out of the US. Joining

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<v Speaker 1>US now to discuss Richard Wilson, who is CEO of

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<v Speaker 1>Interactive Investor, which is a subsidiary of Aberdeen with over

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<v Speaker 1>four hundred thousand customers here in the UK. Richard, I'm

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<v Speaker 1>really pleased to have you in this studio. A very

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<v Speaker 1>good morning to you, Mollie. Can we start by your

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<v Speaker 1>thinking on the US election, the results and how it

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<v Speaker 1>might affect your investors. How do you think about today

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<v Speaker 1>tomorrow the volatility?

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<v Speaker 2>Well, first, all the elections historically, I think six of

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<v Speaker 2>the elections since nineteen eighty have been down to one

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<v Speaker 2>fifty voters, so we're in another very close call. I'm

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<v Speaker 2>no better than anyone else that's speculating on the outcome.

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<v Speaker 2>What the markets will want is clarity, and there's a

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<v Speaker 2>risk that, as we've seen in a couple of elections

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<v Speaker 2>in the last couple of decades, it becomes litigus if

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<v Speaker 2>if it's not clear, then we'll have risk off. But

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<v Speaker 2>beyond that, historically, when there is being has been a

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<v Speaker 2>clear outcome that's been very strong for US equities for

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<v Speaker 2>at least for a period. Irrespective of which side of

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<v Speaker 2>the house you're on. I'm not going to call what

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<v Speaker 2>the latest betting is because that moves around. But job

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<v Speaker 2>one is clarity. And then secondly, depending who comes in,

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<v Speaker 2>everyone believes that if Trump comes in, you'll have a

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<v Speaker 2>stronger dollar, you'll have strong gre equities, higher deficit through

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<v Speaker 2>higher borrowing and lower taxes. And the with Camala gets in,

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<v Speaker 2>there's a specially you'll have a slight softer dollar, less borrowing,

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<v Speaker 2>and the US equity markets will be all be up

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<v Speaker 2>a lot of strongly.

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<v Speaker 3>Are you seeing are you seeing much adjustment from your

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<v Speaker 3>four hundred thousand or so customers in terms of how

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<v Speaker 3>they're positioning around this.

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<v Speaker 2>There has been a little bit of certainly much more

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<v Speaker 2>activity I think we've got fifty percent increased activity on

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<v Speaker 2>US markets compared to the normans only much more than

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<v Speaker 2>on the UK markets, but your taxed on UK markets,

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<v Speaker 2>so you get a bit less, a bit less, a

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<v Speaker 2>bit less volume. Not obvious is the answer. There's the

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<v Speaker 2>clear is a Trump trade to your back the mag

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<v Speaker 2>seven and of course the large US stocks drive the

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<v Speaker 2>two prime indices, I mean the Nvidia and Apple kind

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<v Speaker 2>of call the call the index. So you've got some

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<v Speaker 2>activity around that, but we're small frime in the UK

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<v Speaker 2>compared to the US markets, so not much to say.

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<v Speaker 1>Okay, let's think about the UK budget, the biggest increase

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<v Speaker 1>in taxes in thirty years. What did you make of it?

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<v Speaker 2>Well, the majority of the changes were very well telegraphed.

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<v Speaker 2>You've got a spend, tax and borrow agenda with numbers

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<v Speaker 2>that are very high, and the ifs came out and

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<v Speaker 2>the OBI can confirmed that that leads to lower growth

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<v Speaker 2>going forward, a higher debt servicing burden, and of course

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<v Speaker 2>the guilt markets have been a little bit ambiguous about

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<v Speaker 2>their view of that because the yields have gone up

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<v Speaker 2>in two and ten years, basically makes the UK a

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<v Speaker 2>less attractive market to invest. In others because you've got

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<v Speaker 2>a higher tax burden. And the irritation I think for

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<v Speaker 2>many of us is that, whilst there's clearly as a

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<v Speaker 2>fiscal tightrope to walk going after some what would be

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<v Speaker 2>symbolic or illogical taxes like it t reliefs on agriculture

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<v Speaker 2>and business property do undermine entrepreneurship in the country. We've

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<v Speaker 2>got millions of people where the bedrock of our future

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<v Speaker 2>is on entrepreneurship, which comes from family businesses. That's not

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<v Speaker 2>not a sensible way to build growth that it flies

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<v Speaker 2>in the face of your growth agenda.

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<v Speaker 3>So to be clear, you think this budget was gus

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<v Speaker 3>anti growth, yes, no question as a business just as

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<v Speaker 3>a CEO, what are you doing with that increase in

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<v Speaker 3>national insurance you're going to be Does that mean lower

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<v Speaker 3>wages for your team? Are you going to pass it

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<v Speaker 3>up through in terms of high cost for your customers?

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<v Speaker 3>How are you going to manage that?

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<v Speaker 2>I mean, we're in a very competitive environment and the

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<v Speaker 2>option we're we're competing with all the near brokers, the

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<v Speaker 2>US houses, the UK clearing bags, the European houses, everybody,

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<v Speaker 2>the in pension companies. Our option to move price is zero.

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<v Speaker 2>So then you dealing with efficiency or wages or reduced profitability.

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<v Speaker 2>I think Rachel Reeves and one of our inte you said,

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<v Speaker 2>you know, custom companies will be become more efficient as

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<v Speaker 2>if we're not trying to do that every day already.

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<v Speaker 2>So the reality is will either be lower profits and

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<v Speaker 2>therefore kind of lower return and lower ability to reinvesting technology,

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<v Speaker 2>or you look at your wage bill thinking how the

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<v Speaker 2>hell do I solve that?

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<v Speaker 1>Okay, So in terms of what comes next from labor

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<v Speaker 1>for Mansion House, there has been a push to try

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<v Speaker 1>to and in fact a whole group of insurers and

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<v Speaker 1>pension companies agreed to try to put more money into

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<v Speaker 1>UK listed stocks that wasn't mandatory. Does it become mandatory

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<v Speaker 1>under labor? Do they target something? Do they make it

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<v Speaker 1>more compulsory for people to invest in UK listed or

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<v Speaker 1>unlisted assets?

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<v Speaker 2>Yeah? I think well that there are two. There's a

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<v Speaker 2>problem that the UK has, which is compared to some

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<v Speaker 2>other countries in Canada and Australia and a reference quite

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<v Speaker 2>a lot. We have a fragmented pension stock so the

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<v Speaker 2>actual size of the pool that you're allocating is not

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<v Speaker 2>as large as it should be. So there's a task there,

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<v Speaker 2>which is to consolidate pension assets with a big opportunity

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<v Speaker 2>across local councils and the public sectors. Has been well documented.

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<v Speaker 2>The fear that we should have is forcing an allocation

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<v Speaker 2>of risk which is disproportionate. That would conflict with your

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<v Speaker 2>kind of risk management and the members of your long

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<v Speaker 2>term pension holders. So that's not a sensible thing to do.

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<v Speaker 1>But how label will say, how do you get growth

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<v Speaker 1>and how people have been complaining about the fact that

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<v Speaker 1>the UK market is under valued and that we've seen

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<v Speaker 1>a massive decline in investment in UK consul.

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<v Speaker 2>So there are two things there for me. One is

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<v Speaker 2>you've got to create the scale of pension assets so

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<v Speaker 2>that you can make an allocation which is proportionate of

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<v Speaker 2>much bigger base. And secondly, we have been bleeding out

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<v Speaker 2>the UK stock market with stamp due to for the

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<v Speaker 2>last twenty years the British government has sorted in either

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<v Speaker 2>I'm not sure it's too late. It may be too

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<v Speaker 2>late to save it. We are taxing the thing out

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<v Speaker 2>of existence. The UK stock market is untradeable and you

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<v Speaker 2>are taxed to invest in UK companies and it's tax

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<v Speaker 2>free to invest in US.

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<v Speaker 1>It's not complicated, Okay, Richard, thank you so much for

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<v Speaker 1>being with us this morning. Richard Wilson is CEO of

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<v Speaker 1>Interactive Investor. Very good to have you on the program

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<v Speaker 1>and get your views on the UK budget is well

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<v Speaker 1>downing view really on what the UK's done in terms

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<v Speaker 1>of investing in listed stocks, taxing it out of existence.