London - With only weeks to go before Scotland votes on independence, the stock market is shrugging off the impact of a potential break-up of the United Kingdom as investors adopt a wait-and-see attitude rather than seek protection.
This is as much a reflection of the marginal exposure of UK stocks to Scotland, with only 12 companies on the FTSE 350 index based north of the border, as it is about investors' belief that Scots will prove the pollsters right and vote not to split.
The performance of stocks headquartered in Scotland - excluding listed investment trusts - has more or less tracked the broader FTSE 350 since October 15, 2012, the date of the Edinburgh Agreement on the terms for a referendum on Scottish independence, according to data compiled by Thomson Reuters.
The basket of stocks including insurer Standard Life, soft-drink group AG Barr and engineering firm Weir Group is up 17.6 percent in that time, compared with a 19.5 percent gain for the FTSE 350.
Several polls have shown support for independence pushing higher, but the most recent “poll of polls”, on August 15, which was based on an average of the last six polls and excluded undecided respondents, found support for a breakaway stood at 43 percent against 57 percent for remaining within Britain.
Investors said the impact of a “yes” vote on September 18 was hard to quantify and therefore hard to trade around, even disregarding the probability of the outcome.
“There is too much uncertainty to do anything concrete about it in terms of trading strategies,” Veronika Pechlaner, head of global equities at Ashburton, said.
Strategists and analysts warn that a “yes” vote could mean big changes ahead for some companies.
Banks such as Royal Bank of Scotland and Lloyds have already said that an independent Scotland could have a significant impact on compliance costs, taxes and credit ratings, and Scotland's asset-management industry would also be exposed.
It could also leave a bitter taste for top whisky producer Diageo - Scotch whisky is Scotland's second-largest export industry after oil and gas, according to Barclays.
On the other hand, a beneficiary of independence could be the transport industry, as the “Yes” campaign has pledged to halve air-passenger tax.
But even taking into account the variety of possible scenarios, it is hard to avoid the fact that estimated FTSE 350 revenues that come directly from Scotland are around 2 percent of the total - perhaps too small to trade on.
“It's certainly something that (clients) are interested in ...(but) I wouldn't say there's a lot of action taking place,” said Ian Scott, strategist at Barclays.
Listed companies with Scottish headquarters include temporary power provider Aggreko and bus and train operator FirstGroup.
Scotland-based broker Speirs & Jeffrey said that there were no trading strategies in place to prepare for the referendum but that they had opened bank accounts in England and sent out letters to their clients informing them of contingency measures. - Reuters