With a General Election now called for 12 December, there is a chance that the acrimonious stalemate in Parliament over Brexit might soon be over and the UK will leave the EU by 31 January 2020.
Notwithstanding respectable gains in UK equities this year, investors remain subdued.
The sense of Brexit fatigue is palpable. Economic paralysis currently afflicts many sectors (especially housing related) and international influences, notably the US-China trade conflict, have provided further headwinds, with global manufacturing activity slowing sharply as investment decisions are postponed.
A decade-long global expansion has prompted the assumption in some quarters that a recession is imminent, and yet it is hard to see the catalysts for a prolonged downturn.
Consumer spending, the key driver of growth, is hardly under threat when employment continues to grow in most developed economies; the banking sector is in relatively good shape and credit conditions remain favourable; and economic policy is already on a course to provide stimulus, with more promised if deemed necessary.
Against low expectations for the economy next year, and a widespread belief that equities are therefore expensive, we can see grounds for an upside surprise to global equity markets in 2020.
In the UK, with the added complication of Brexit, this potential is even more pronounced. The prospect of leaving with a deal early next year could unleash considerable pent-up demand in the real economy, and an equivalent tsunami of investment back to the UK equity market from international investors.
A modest UK equity valuation level by historic and international comparison is attractive once Brexit uncertainty is removed.
Sterling strength might negatively impact some sectors, however. The nascent rally in lowly rated cyclical sectors should continue, so banks and housebuilders might be expected to be key beneficiaries.
Higher interest rates might hurt expensive bond proxy sectors, and so high quality investors should focus on growth areas such as healthcare rather than pedestrian consumer staples.
Chris Rodgers is head of UK equities at Sanlam Investments
• UK equities are unloved. Valuations are low by global comparison and international investors are very underweight
• Loose monetary policy globally provides a tailwind for all equity markets
• Short-term Brexit and political uncertainty overhangs the economy and equity market
• Global economic risks remain high