Catalan Chaos Continues

Monday, 23 October: Japan’s re-elected Prime Minister Shinzo Abe showed the world how parliamentary elections can be done, amid the political soap opera that continues in Spain. Despite reports that around 59% of the public don’t actually like Abe, the lack of a strong opposition means the Liberal Democratic Party retains its majority and Abe can continue as he was, in some respects. Abe has a strong stance against North Korea (understandable) with the early election called for a greater mandate to deal with “crises” (Kim Jong Un he’s looking at you when he says this).

The win for Abe came as little surprise as polls had suggested the outcome all along. Ultimately the Nikkei rose 1.1%, its 15th consecutive day of gains, a new record for the index as Japanese exporters rose on a weaker Japanese yen (USD/JPY +0.21% @ ¥113.745 at the time of writing).

Back to Spain and the Catalan drama continues to unfold. Over the weekend the Spanish PM Mariano Rajoy announced plans to dissolve the Catalan parliament, almost as a last resort as the Catalonia region continues to push for independence. Catalan President Carles Puigdemont rejected Madrid’s plans and subsequently the Spanish Foreign Minister has responded for calls to obey Madrid. The Spanish PM has vowed to curtail some of the freedoms of Catalonia’s parliament, potentially sacking some of its political players and threatening to hold regional elections within 6 months. Protests continue in Barcelona and it looks like there will be a vote from the upper house of the Senate on Friday as to whether Rajoy’s threat/announcement will be carried through. Should the Senate agree with Rajoy, Madrid can take full control of Catalonia’s finances, police and public media , curbing the powers of the regional parliament until the aforementioned regional elections take place. Unsurprisingly, equities in Spain have pared back, closing down 0.68%. The Euro also felt the brunt of uncertainty in the region, lower by 0.35% against the pound and US dollar at the time of writing.

If you had been hoping for a bit of movement in the UK following Friday’s rather dull end, you are set to be disappointed. Indices closed almost flat in London, despite Spire Healthcare, the UK’s second largest provider of private healthcare rising 15% after news it had rejected a takeover approach from shareholder Mediclinic. The offer values Spire at £1.2bn, equating to a 14% premium to Friday’s close, although it is expected a higher offer will be made before the formal bid deadline of November 20th. We can only hope for a little more excitement in London this week with the advance reading of Q3 GDP for the UK due on Wednesday.

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