Why you should pay attention to Scottish referendum opinion polls

Russ Koesterich, CFA - Author

Nov. 26 2019, Updated 10:41 a.m. ET

Here’s my take on what this week’s major events could mean for investors.

The Scottish Referendum. As I write in my new weekly commentary, over the past two weeks, several polls have suggested a realistic chance that the people of Scotland will vote for independence in this week’s referendum.

While the vote is obviously most important for the U.K., a vote for independence would have broader significance, particularly for the rest of Europe.

Market Realist – The graph above shows the voting intention of Scottish voters by age group. As you can see, the sentiment for an independent Scotland is particularly strong among the young population between 25 and 44 years of age.

Opinion polls have instilled nervousness, as they seem to be too close to call. In fact, a couple of surveys—like YouGov’s—indicated that the Yes Campaign seemed to be leading by two percentage points.

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Market Realist – The graph above shows the reasons cited by those against the Scottish independence movement. Of these voters, 53% have strong feelings for the United Kingdom, whereas 37% cite strong public pension plans as the reason for sticking to the UK. About 33% felt that a divided UK would mean dampened economic prospects.

Market Realist – The graph above shows the results of a survey conducted by ICM and The Guardian to ascertain the motivations of those voters in favor of an independent Scotland. About 51% cite Westminster’s (the UK’s) style of politics as the reason to separate, whereas a significant 40% believe that their future would be more prosperous if Scotland were independent.

U.S. equity markets (IVV) were caught unawares by the opinion polls. The news of several polls favoring an independent Scotland caused broad market indices like the S&P 500 (SPY), the Dow Jones Industrial Average (DIA), and the NASDAQ (QQQ) to fall sharply and register weekly losses.

Small-cap stocks (IWM) and internet and technology stocks (XLK) declined on September 15, 2014, amid nervousness about the Scottish referendum and the Fed meeting scheduled for Tuesday.

Read on to the next part of this series to understand the implications of an independent Scotland on the U.S. economy.


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