follow the money behind boris

Top civil servant: Hammond was right to query no-deal backers
Graeme Wearden, Groon, Sep 29 2019

Former chancellor Philip Hammond’s attack on Boris Johnson’s hedge-fund backers has been supported by a former top Treasury civil servant, as financial experts raise concerns over the PM’s links to the City. Nick Macpherson, former permanent secretary to the Treasury, said Hammond was right to question the political connections of some of the hedge funds with a financial interest in no deal. Johnson received five-figure donations from several leading fund managers during the Conservative leadership race, some of whom also backed the Leave campaign. After Hammond wrote that some of Johnson’s City supporters have bet billions of pounds on a hard Brexit, Macpherson warned:

They are shorting the pound and the country, with the British people the main loser.

Hammond also claimed over the weekend that such funds would be happy to see “scant progress” ahead of the Oct 31 deadline to leave the EU, or seek an extension. One government minister was quick to dismiss Hammond’s allegations, but they raised fears that the prime minister faces a conflict of interest. Financial commentator and author Frances Coppola said:

Many hedge-fund managers see Brexit (including the no-deal variety) as an opportunity from which they obviously hope to profit, and they are positioning their portfolios accordingly. Those who donated to Johnson’s campaign aren’t necessarily trying to influence policy. They may simply see him as the best hope of getting the Brexit they want. But financial backing from people who hope to profit from Brexit creates a conflict of interest for Johnson, since it puts psychological pressure on Johnson to deliver what his backers want rather than what is in the best interests of the country.

The Financial Conduct Authority declined to comment on Hammond’s claim. The FCA is responsible for regulating short-selling in the UK. This is the practice by which investors bet against a stock by borrowing its shares, selling them, and hoping to buy them back at a cheaper price. The FCA maintains a database of short positions, which show that more than 130 investors have built up more than 500 bets against London-listed companies, such as outsourcing group Kier and motoring assistance group AA. For example, Odey Asset Management has taken short positions against homebuilder Berkeley Group and shopping centre landlord Intu. The property sector is seen as particularly vulnerable to a no-deal Brexit, which would hurt consumer spending and deter people from moving house. City grandee and hedge fund manger Crispin Odey, who runs the fund, has publicly backed Boris Johnson and supported Brexit. But Odey also holds short positions in Debenhams and Metro Bank, who are both under pressure due to non-Brexit issues. Also, so-called ‘long/short’ fund managers, such as Odey often bet against a particular company by shorting it and buying its rivals. This strategy can pay off regardless of macro-economic conditions, if the company in question underperforms the rest of the sector. The Financial Times has disputed the notion that a no-deal Brexit is a hedge fund conspiracy. FT Alphaville explained:

Equity outcomes are explicitly uncertain. What is a short position on a “no deal Brexit”? A short position on any company? A short position could also be a play on remain. For instance, a company might benefit from a stronger dollar, or less EU regulation.

One Comment

  1. Doug Colwell
    Posted September 30, 2019 at 4:12 pm | Permalink

    Our Boris looks like another fucking Winston.

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