Morning Note Tuesday 9 September 2014
If Scotland becomes independent, how is this likely to affect NAB?
Last night, the FTSE fell over 1% early in its trading session, Polls started to show signs of victory for the Scottish Independence “yes vote,” but it’s clearly very close. Interestingly, the bookmakers still have the “no vote” well ahead. The referendum will take place on Thursday, 18th September, with an Independence Day to be March 24th 2016 if the result is a “yes vote” – exactly 309 years since the countries joined. Overall I believe it’s very hard to know whether the Scottish will vote with their heads or hearts, perhaps if Braveheart is on TV the night before, it will be a “yes vote.” Two things appear clear if we get a “yes vote,” most people have no idea of the consequences / what’s involved and the markets will take it badly as economic uncertainty is never taken well. I have read over the last 24 hours a few financial reporters calling this a potential Black Swan event. Overall this may be an extreme call, but I can see nothing positive coming out of a “yes vote”. Whatever the long term prospects for Scotland and the rest of the UK, both could pay a steep and immediate economic price, during the short and medium term; it will be very hard to determine the distribution of assets, liabilities, national debt etc. between the north and south. I cannot help but keep thinking that eventually Scotland will become another Greece without the sun.
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