You are here: Home - Investing - Experienced Investor - News -

BLOG: Brexit endgame creates opportunities for savvy investors

0
Written by: Adrian Lowcock
18/02/2019
Brexit has deterred both British and foreign investors from the UK, but the endgame is in sight and it's time to revisit your long-term goals, writes Adrian Lowcock.
BLOG: Brexit endgame creates opportunities for savvy investors

Brexit has been weighing on the UK since the EU Referendum in 2016. The vote that day has had an impact on the economy and investors alike. Companies, both UK and international, have been withholding investment into the UK. At the same time investors, again both British and foreign, have been drawing money out of the UK.

This is to be expected; companies and investors both don’t like making important decisions on spending money when there are significant unpredictable factors in the way. Companies will delay their investment, for a while at least.  Investors on the other hand will look for alternative opportunities which they perceive to be less risky.

The result is slower economic growth and an underperformance of the UK stock market. Given this backdrop the UK economy has held up rather well in the environment of under investment. The UK stock market has lagged behind global markets as investors shun the region and allocate money elsewhere.

However, as we approach the endgame of Brexit there are opportunities being created for savvy and patient investors.

Pound falls, FTSE 100 rises

The FTSE is full of globally diverse businesses which have little to do with the UK economy. These benefit from a weaker pound and as such will provide some defensive elements to a portfolio should we suffer a hard Brexit. We have seen time again in recent years the pound falling and the FTSE 100 rising in response.

Once Brexit has actually happened businesses can begin to make plans and decide how to invest in that environment. Companies which had been withholding investment will begin to put their capital to work which should give a boost the UK economy.

Some of the best investment opportunities are companies which can be best described as self-help. These businesses don’t wait for the economic environment to dictate to them. Instead they will adapt to the new environment and look for new opportunities. While Brexit will result in change, this can be good news for some flexible businesses.

The UK stock market has certainly been held back by Brexit and is generally bottom of many investor’s lists until they can understand what is going on. And who can blame them – it seems that barely anyone knows what will happen at the end of March. However, once the dust has settled investors will come back to the UK. The current lack of interest though has led to valuations of some companies becoming very cheap and this offers a great opportunity for investors. When international investors do decide to come back they may well do so quickly making it hard for individuals to catch up.

Look past the present

Investing is for the long term and this is an important consideration when looking at Brexit and deciding whether or not to invest. No matter what time you live in, the events of those times feel more significant and important than anything that happened in the recent past or is likely to happen in the future. However, the fact is investors almost always over emphasize the importance of present events. If you look at the long term performance chart of the FTSE 100, of the few events that can be recognised (dotcom bubble, global financial crisis), there is one consistent fact. The markets do recover and share prices go higher.

While everyone else is worrying about Brexit, take time to focus on the longer term and look at your own goals.

Adrian Lowcock is head of personal investing at investment platform Willis Owen

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • Discover how your pension can be used to make a range of investments with attractive tax advantages. By… https://t.co/LMSAsBt3hb
  • RT @Defaqto: Looking for your first job? We outline our top tips for understanding and improving your credit score. Take a look @YourMoney
  • @YourMoneyUK Biased. People don't look at this stuff rationally. They also would not buy annuities if there ware decent alternatives.

Read previous post:
Three ways to ‘Marie Kondo’ your spending habits

If you haven’t heard of Marie Kondo, you’ve probably been living under a rock.

Close