How to Trade ‘Scotsie 100’ If Scotland Votes to Split – Bloomberg 09-10-14

Salient to Investors:

  • Andrew Garthwaite et al at Credit Suisse say there is a 25% chance Scotland will choose independence on September 18, while markets will price in a 35% chance, so recommend buying Scottish stocks 2 days before the vote because investors tend to overact to political uncertainty. If independence wins, they recommend avoiding Scotland’s stocks because it would cause a deep recession and ongoing political turmoil. The strategists say 20 Scottish companies are at risk of a “yes” vote because of their reliance on Scottish revenues or connections to North Sea oil or other reasons: stocks including Royal Bank of Scotland, John Wood, SSE and Stagecoach.
  • Paul Marsh at London Business School and Scott Evans at Walbrook Economics found that £1 invested in their “Scotsie 100” in 1955 would have grown to £648 versus £1,168 in the rest of the UK – excluding financial stocks, the Scottish index outperformed the rest of the UK by a small margin.

Read the full article at http://www.bloomberg.com/news/2014-09-10/how-to-trade-scotsie-100-if-scotland-votes-to-split.html

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