Brexit has dominated the news in the run up to the 23rd June referendum. It has monopolised the news since the shock, and in many cases horror, experessed at the results.
Many of us will have exposure to the UK in our investment portfolios, perhaps through equities and bonds, and perhaps via property. Most likely we will have some currency risk to the Pound.
In the face of such uncertainty and opacity of what lies ahead for our UK linked investments, we asked five wealth professionals across different professions of tax, trusts and investments, to each give us a snippet of advice that we can heed in situations like these. One thing is for sure, that unforeseen socio-economic events like these are increasingly common, and will happen again.
Take extreme caution, further disruption lies ahead says Rohit Bhuta of CrossInvest
BREXIT has both tactical and longer term implications for our portfolios. In the short term we will use any bounce in STOXX, FTSE UK and GBP to lower exposures to materially underweight our exposure to these markets. Tactically we would raise USD now and sit out likely further downside in risk assets over the next weeks, which we think may happen despite the intermittent rallies. We remain overweight USD and see GBP heading below 1.30 & possibly even as low as 1.20.
Strategically we believe the political and economic uncertainties for EU will, barring an unlikely reversal of BREXIT and a so far unseen actual EU political leadership, continue to add instability. BREXIT might be a ‘shock’ but it has implications for a far wider ‘shock’ should similar voter anger see Trump succeed and EU elections support emergence of populist parties sceptical of EU and EURO to power – if so the post-WW2 world order will be at risk.
We are getting used to this new normal mind you. We have seen more market turmoil and downturns in the past 8 years then in the past 30 – based on the way things have transpired, we should start seeing certain resilience by now – surely! Resilience, alas, comes from confidence and the one thing that the developed economies of today lacks, is confidence. What they have an abundance of unfortunately is fear, which is the last thing we need.
Ironically, the stability of Asia, the emergence of Singapore as a global financial power-house and the opportunities presented by the “so called” emerging markets within Asia – India, new economy China, Indonesia, Philippines and Vietnam – might just be what the investment world needs right now in order to bring back sanity!!
UK recession looks inevitable says Steve Davies of Javelin Wealth Management
At best, the UK faces at least two years of suspended business investment decisions until the UK’s relationship with the EU is clarified. The EU seems disinclined to give the UK an easy ride. Recession or stagnation looks inevitable, exacerbated by a period of short-term political limbo as a new government team is formed.
Brexit is worse for the EU than for the UK says Bryan Goh of Bordier Private Bank
In the foreseeable future, Brexit has limited impact. It will result in a weaker currency, it is probably worse for the EU than for Britain and thus worse for the Euro than Sterling. The ECB and BoE will have to ease further and increase QE or cut rates. The Fed will likely not raise rates at all this year.
Brexit will impact UK property but it could go either way says Henno Boshoff of Harney Westwood & Riegels legal firm
Real estate in London has for many years been a sought after investment for HNWI’s in Asia, primarily due to the stability of the market. The recent vote for Brexit will inevitably have an impact on that, although if the pound continues to fall demand might actually increase.
Recent UK tax changes will accelerate a slow-down, says Peter Milnes of Rawlinson and Hunter
Brexit, as we have seen, is going to create a lot of short term uncertainty and instability, but depending on the British Governments ability to negotiate with the EU, the long term effects should hopefully be minimal. It will have short term implications on property prices in London and this, added to the recent changes to the property tax regime in the UK, is likely to have a cooling effect on the market. Recent proposed changes the “Res-Non Dom” scheme maybe delayed as the Revenue have other focus areas to deal with – but that remains to be seen.
Take lessons from this on how your investment portfolio is positioned for risk says Andreas Schwartz of Golden Equator Capital
The Brexit has shown that managing the money of your clients is very much about risk management. In periods like this you have to hedge your clients’ currency exposure rather than speculate on the outcome of the event, as the unexpected often happens as we have once again learned out of this situation.
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