Veteran emerging markets investor sees ‘tremendous instability’ in UK, media reports
Neptune Investment Management, known for funds with high-risk investments in volatile emerging markets, is eliminating the exposure of its key global funds to the UK for fear of political strife.
Robin Geffen, CEO and founder of the London-based firm, says elections in May in the UK threaten to radically alter politics in the country, sharply lower incoming foreign investment and weaken the pound as voters may cast their ballots out of anger and frustration.
‘We are sleepwalking toward the most divisive and difficult election in our lifetimes,’ Geffen says in an interview with the Financial Times. ‘The election will cause tremendous instability. If overseas investors see uncertainty it would be very easy for them to get out of UK equities: it is a very liquid market, very big moves can happen. People have massive relative over-commitments to UK equities.’
Geffen has stripped the firm’s global equity and global alpha funds of all UK exposure for fear of volatility. He earlier eliminated the funds’ exposure to Russia due to fighting in Ukraine and western sanctions against Moscow.
Geffen compares the political situation in the UK with that of Greece, where voters in January elected the previously little-known Alexis Tsipras, largely out of frustration with years of austerity as the country attempted to control its foreign debt. The election helped send the euro to an 11-year-low against the dollar and hit stocks worldwide as investor predicted a Greek exit from the euro.
Greek elections also raised the prospects for lesser-known, unconventional parties throughout Europe, such as anti-austerity party Podemos in Spain, the populist UKIP in the UK, the National Front in France and other formerly fringe parties in Italy, Portugal and elsewhere in Europe.
Leading up to the May 7 election in the UK, ‘we have a very large number of factors in play,’ Geffen says in the FT interview. ‘The [Scottish National Party] is determined to eviscerate Labour in Scotland, UKIP is revivified and has representation in parliament. We have also got a revival in the Green Party, and Plaid Cymru can emerge as a crucial factor to disembowel the Labour vote in Wales.’
