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The fretting over Scottish independence has rattled currency traders and equity investors.

But could this market McWobble actually help the FTSE 100 finally hit a post-crisis record high?

OK, given the uncertainty even a close No vote may deliver – the “Neverendum” scenario – that sounds a bit optimistic.

But it may be possible that the volatility created by the poll could reverse the London benchmark’s long period of underperformance.

As we have noted before in Trading Post, the Footsie has struggled relative to peers such as the S&P 500 and Dax partly because it has a heavy weighting of problem sectors, notably banks and resources.

It has also been hurt by a stronger pound.

As Jonathan Stubbs, strategist at Citi, notes, “UK plc derives almost 75 per cent of total sales/revenues/profits from overseas”.

The negative correlation between sterling’s trade-weighted index and UK stocks’ relative performance is pretty tight over the past 18 months, Mr Stubbs says.

And now the pound is getting whacked.

“Any domestic uncertainty would be less significant for most UK companies unless there is a significant country risk premium which leads to a higher cost of capital.”

Copyright The Financial Times Limited 2017. All rights reserved.
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