Investors need to remain confident as Brexit approaches
It’s been hotter than the tropics, the World Cup brought us to the brink of emotional ruin, the stock market is nearing an all-time high and we can’t speak to anyone without still hearing a reference based on Love Island. In amongst all of this, the government is floundering – the hype, the speculation, the tears and tantrums of Brexit has nearly brought the cabinet to a standstill.
With Westminster in turmoil and speculation over another general election being felt all over the country, it would be easy to start making some rash investment decisions.
When it comes to your money, there is one message coming out of every financial expert’s mouth – don’t panic. Remember all the hype around how the world was going to come to a complete standstill on the turn of the millennium? Well, similarly to how that didn’t happen, Brexit shouldn’t bring an overwhelming sense of fear to every investor at the mere mention of it.
Having said this, the recent cabinet reshuffle no doubt leaves most investors questioning ‘what next?’.
According to recent research, three quarters of personal investors said that the EU referendum has had a positive impact or made no difference to their investments. This is comparable to 86 per cent of personal investors expecting a negative impact or no difference to their investments when asked the same question prior to the referendum.*
Our opinion at PM+M is that for most, the rise in markets since the referendum result have generally improved sentiment. It is certainly the case that investor fears of the impact on the stock market post-leave vote never materialised. However, fear has not gone away with many predicting a negative impact on markets as we approach the Brexit date.
With the twists and turns of the Brexit negotiations not expected to slow down anytime soon, the view is that markets could be more volatile in the lead up to our EU withdrawal. We’re asking investors to remain confident in their portfolio picks and see the change in market as an opportunity not a threat.
The key message we are passing on to our clients is assess whether Brexit will affect demand or price for a company’s products or services, evaluate these implications and whether this is priced into the investment.
Brexit uncertainty and cabinet reshuffles obviously cause uncertainty, this has been the case for the last two years and something we have become used to. However during this period, investment returns have not been the catastrophe that was predicted. Our opinion is that we do not think that UK investors should be panicking and therefore there is no need to make mass and/or rash changes to their portfolio.
In the words of the World War II government – keep calm and carry on!
*The Share Centre Survey via www.ftadviser.com
