Client Update - 3rd May 2024

Despite his political tenure lasting longer than that of Liz Truss, Humza Yousaf’s resignation as Scottish First Minister, after just a year in power, sees him join a growing pantheon of British political leaders leaving office when they have only just got started.

On Monday, Yousaf announced he would be stepping down as leader of the Scottish National Party (SNP). His resignation came after a surprising move last Thursday, when he decided to end the SNP’s cooperation with the Scottish Greens, stating that the partnership had "run its course." Consequently, Yousaf found himself governing with a minority vote, a challenging circumstance exacerbated by the opposition's response. His former allies, The Greens, aligned with other opposition parties in backing not just one but two votes of no confidence. One directed at his leadership as the head of Scotland and another targeting the entire Scottish government.

This news is just the latest illustration of how the SNP has gone, in less than two years, from a seemingly unassailable position to a party racked by unforced errors. Support for the party had begun to crater well before Yousaf took over from his predecessor Nicola Sturgeon. Latest polling from YouGov, carried out ahead of Yousaf’s resignation, found Labour inching ahead of the SNP by one point to 34% of votes. Labour is said to be targeting as many as 25 seats, potentially overtaking the SNP as the largest representative of Scots in Westminster. This would help build momentum for the party as it tries to wrestle back Labour’s former strongholds in Scotland’s Central Belt, including Glasgow, from SNP control, key to Starmer securing a robust majority in the general election that Sunak has promised later this year.

Amidst the growing uncertainty in UK politics, the UK stock market has remained resilient, with the FTSE 100 reaching a new all-time high on Tuesday, with the index showing a 5.5% increase year to date. Anglo American, the ninth largest constituent of the index, experienced a notable increase of 3.8%, fuelled by mounting speculation regarding a potential takeover bid. Reports indicate that Australian-based mining titan BHP is contemplating an enhanced offer for the UK-listed company, prompted by the rejection of their initial all-share deal valued at £31.1 billion by Anglo American last week.

This rejection, which the company’s chairman, Stuart Chambers, described as "opportunistic" and one that significantly undervalued the company's prospects, has highlighted how cheap some UK assets appear to be on the global market. This incident aligns with a broader trend in the UK stock market which has witnessed a substantial uptick in mergers and acquisitions (M&A) activity. M&A activity involving UK companies has soared by 88% this year, making the UK the second most active region for takeovers globally. There is renewed hope that through this M&A activity, the relief that inflationary pressures in the US are not as bad as feared and hopes that a ceasefire could be negotiated in the Middle East, will all contribute to a continued rally in global equity markets.

Do have a good weekend.