Speaker 1: So as voting stations open in the United States, markets
Speaker 1: are preparing for increasing volatility. In fact, we've seen slightly
Speaker 1: reduced levels of trading for European stocks. Your stock six
Speaker 1: hundred currently twenty percent below the average in early trading.
Speaker 1: It also comes ahead of the FED decision, of course,
Speaker 1: during power press conference on Thursday. Bank of England verdict
Speaker 1: on the Chancellor Rachel Reeves's budget would also come later
Speaker 1: in the week, but everything's being overshadowed by whether we
Speaker 1: get clarity and how quickly out of the US. Joining
Speaker 1: US now to discuss Richard Wilson, who is CEO of
Speaker 1: Interactive Investor, which is a subsidiary of Aberdeen with over
Speaker 1: four hundred thousand customers here in the UK. Richard, I'm
Speaker 1: really pleased to have you in this studio. A very
Speaker 1: good morning to you, Mollie. Can we start by your
Speaker 1: thinking on the US election, the results and how it
Speaker 1: might affect your investors. How do you think about today
Speaker 1: tomorrow the volatility?
Speaker 2: Well, first, all the elections historically, I think six of
Speaker 2: the elections since nineteen eighty have been down to one
Speaker 2: fifty voters, so we're in another very close call. I'm
Speaker 2: no better than anyone else that's speculating on the outcome.
Speaker 2: What the markets will want is clarity, and there's a
Speaker 2: risk that, as we've seen in a couple of elections
Speaker 2: in the last couple of decades, it becomes litigus if
Speaker 2: if it's not clear, then we'll have risk off. But
Speaker 2: beyond that, historically, when there is being has been a
Speaker 2: clear outcome that's been very strong for US equities for
Speaker 2: at least for a period. Irrespective of which side of
Speaker 2: the house you're on. I'm not going to call what
Speaker 2: the latest betting is because that moves around. But job
Speaker 2: one is clarity. And then secondly, depending who comes in,
Speaker 2: everyone believes that if Trump comes in, you'll have a
Speaker 2: stronger dollar, you'll have strong gre equities, higher deficit through
Speaker 2: higher borrowing and lower taxes. And the with Camala gets in,
Speaker 2: there's a specially you'll have a slight softer dollar, less borrowing,
Speaker 2: and the US equity markets will be all be up
Speaker 2: a lot of strongly.
Speaker 3: Are you seeing are you seeing much adjustment from your
Speaker 3: four hundred thousand or so customers in terms of how
Speaker 3: they're positioning around this.
Speaker 2: There has been a little bit of certainly much more
Speaker 2: activity I think we've got fifty percent increased activity on
Speaker 2: US markets compared to the normans only much more than
Speaker 2: on the UK markets, but your taxed on UK markets,
Speaker 2: so you get a bit less, a bit less, a
Speaker 2: bit less volume. Not obvious is the answer. There's the
Speaker 2: clear is a Trump trade to your back the mag
Speaker 2: seven and of course the large US stocks drive the
Speaker 2: two prime indices, I mean the Nvidia and Apple kind
Speaker 2: of call the call the index. So you've got some
Speaker 2: activity around that, but we're small frime in the UK
Speaker 2: compared to the US markets, so not much to say.
Speaker 1: Okay, let's think about the UK budget, the biggest increase
Speaker 1: in taxes in thirty years. What did you make of it?
Speaker 2: Well, the majority of the changes were very well telegraphed.
Speaker 2: You've got a spend, tax and borrow agenda with numbers
Speaker 2: that are very high, and the ifs came out and
Speaker 2: the OBI can confirmed that that leads to lower growth
Speaker 2: going forward, a higher debt servicing burden, and of course
Speaker 2: the guilt markets have been a little bit ambiguous about
Speaker 2: their view of that because the yields have gone up
Speaker 2: in two and ten years, basically makes the UK a
Speaker 2: less attractive market to invest. In others because you've got
Speaker 2: a higher tax burden. And the irritation I think for
Speaker 2: many of us is that, whilst there's clearly as a
Speaker 2: fiscal tightrope to walk going after some what would be
Speaker 2: symbolic or illogical taxes like it t reliefs on agriculture
Speaker 2: and business property do undermine entrepreneurship in the country. We've
Speaker 2: got millions of people where the bedrock of our future
Speaker 2: is on entrepreneurship, which comes from family businesses. That's not
Speaker 2: not a sensible way to build growth that it flies
Speaker 2: in the face of your growth agenda.
Speaker 3: So to be clear, you think this budget was gus
Speaker 3: anti growth, yes, no question as a business just as
Speaker 3: a CEO, what are you doing with that increase in
Speaker 3: national insurance you're going to be Does that mean lower
Speaker 3: wages for your team? Are you going to pass it
Speaker 3: up through in terms of high cost for your customers?
Speaker 3: How are you going to manage that?
Speaker 2: I mean, we're in a very competitive environment and the
Speaker 2: option we're we're competing with all the near brokers, the
Speaker 2: US houses, the UK clearing bags, the European houses, everybody,
Speaker 2: the in pension companies. Our option to move price is zero.
Speaker 2: So then you dealing with efficiency or wages or reduced profitability.
Speaker 2: I think Rachel Reeves and one of our inte you said,
Speaker 2: you know, custom companies will be become more efficient as
Speaker 2: if we're not trying to do that every day already.
Speaker 2: So the reality is will either be lower profits and
Speaker 2: therefore kind of lower return and lower ability to reinvesting technology,
Speaker 2: or you look at your wage bill thinking how the
Speaker 2: hell do I solve that?
Speaker 1: Okay, So in terms of what comes next from labor
Speaker 1: for Mansion House, there has been a push to try
Speaker 1: to and in fact a whole group of insurers and
Speaker 1: pension companies agreed to try to put more money into
Speaker 1: UK listed stocks that wasn't mandatory. Does it become mandatory
Speaker 1: under labor? Do they target something? Do they make it
Speaker 1: more compulsory for people to invest in UK listed or
Speaker 1: unlisted assets?
Speaker 2: Yeah? I think well that there are two. There's a
Speaker 2: problem that the UK has, which is compared to some
Speaker 2: other countries in Canada and Australia and a reference quite
Speaker 2: a lot. We have a fragmented pension stock so the
Speaker 2: actual size of the pool that you're allocating is not
Speaker 2: as large as it should be. So there's a task there,
Speaker 2: which is to consolidate pension assets with a big opportunity
Speaker 2: across local councils and the public sectors. Has been well documented.
Speaker 2: The fear that we should have is forcing an allocation
Speaker 2: of risk which is disproportionate. That would conflict with your
Speaker 2: kind of risk management and the members of your long
Speaker 2: term pension holders. So that's not a sensible thing to do.
Speaker 1: But how label will say, how do you get growth
Speaker 1: and how people have been complaining about the fact that
Speaker 1: the UK market is under valued and that we've seen
Speaker 1: a massive decline in investment in UK consul.
Speaker 2: So there are two things there for me. One is
Speaker 2: you've got to create the scale of pension assets so
Speaker 2: that you can make an allocation which is proportionate of
Speaker 2: much bigger base. And secondly, we have been bleeding out
Speaker 2: the UK stock market with stamp due to for the
Speaker 2: last twenty years the British government has sorted in either
Speaker 2: I'm not sure it's too late. It may be too
Speaker 2: late to save it. We are taxing the thing out
Speaker 2: of existence. The UK stock market is untradeable and you
Speaker 2: are taxed to invest in UK companies and it's tax
Speaker 2: free to invest in US.
Speaker 1: It's not complicated, Okay, Richard, thank you so much for
Speaker 1: being with us this morning. Richard Wilson is CEO of
Speaker 1: Interactive Investor. Very good to have you on the program
Speaker 1: and get your views on the UK budget is well
Speaker 1: downing view really on what the UK's done in terms
Speaker 1: of investing in listed stocks, taxing it out of existence.