We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".

Continue

Features

Twitter board

Follow us
  • RT @PensionsSion: Portfolio Prepared? Join us and @portfolio_inst on 4th July 2018 to hear presentations on latest investment trends, helpi…yesterday
  • RT @csgmoore: My latest feature for @portfolio_inst where I use the USS crisis to explain everything you wanted to know about valuing defin…yesterday
  • RT @JohnRalfe1: @csgmoore @portfolio_inst Very good piece #USSyesterday
  • RT @eVestment: How is interest in #realestate impacting the #UK pension business? @portfolio_inst has a look https://t.co/1w82Kz4o6Vyesterday
  • Karen Shackleton @MJHudsonCorp #SRI implementation as part of risk management is mainstream now @portfolio_inst #SRI Roundtableyesterday
  • John Olsen: "A key strength of the British asset management industry is now asset managers get together and work on… https://t.co/ADtXBGga0qyesterday
  • Discussing investment challenges at the @portfolio_inst #SRI Roundtable with @esmeefairbairn @AonHewitt… https://t.co/r1iYOrYeloyesterday
  • Lively debates at the @portfolio_inst #SRI Roundtable https://t.co/9j0ajME8Ztyesterday
  • John Olsen, fund manager: "Industry wide frameworks on #SRI can kill a lot of constructive dialogue" @MandGcareeers @mandgprofyesterday
  • Tim Manuel @AonHewitt: Challenge with passive #SRI investing - your outcomes could be completely different dependin… https://t.co/U1OjPYqd2syesterday
  • Wim van Hyfte: Short term benchmarking is a huge challenge to #SRI investing which should be more long-term oriented @candriamyesterday
  • Wim van Hyfte, global head of responsible investments and research @candriam : I'm not sure we need a universal def… https://t.co/qvYRbFglf3yesterday
  • Tim Manuel, UK head of responsible investment @AonHewitt: "The best way to progress the discussion on ESG is to foc… https://t.co/hCSwTi55Qqyesterday
  • James Brooke Turner, investment director, @NuffieldFound :"It is no longer acceptable to make money at any price"… https://t.co/vUKTy2ENcYyesterday
  • Beatrice Hollond, trustee at @esmeefairbairn Foundation says overall, pension funds should be responsible investor… https://t.co/4UZcRdjxF5yesterday
  • Our Responsible Investment round table is kicking off, featuring @esmeefairbairn @AonHewitt @MandGCareers… https://t.co/81pUdO6DBYyesterday
  • Beatrice Hollond: "When we started the #ESG focus was very much on smaller funds, we now implement it as part of ou… https://t.co/YyNm9OUoFsyesterday
  • Karen Shackleton @MJHudsonCorp "I can easily see pension funds applying ESG in all equity and bonds investments, th… https://t.co/Fiv4xmbrPKyesterday
  • Tim Manuel @AonHewitt "the benefit of divestment is that is very easy to implement, #ESG engagement requires a much more nuanced approach"yesterday
  • Beatrice Hollond @esmeefairbairn #ESG Engagement with boards can have a deeper impact over time "yesterday

Strategy

What would a Brexit mean for investors?

What would a Brexit mean for investors?

Tuesday 24th May 2016

With the UK's future in Europe to be decided next month, what would its departure mean for investors? Emma Cusworth finds out.

As the UK’s ‘in’ or ‘out’ vote on membership of the European Union on 23rd June looms large over the domestic market, the polls remain deadlocked and the outcome will be a close-run race.

While many in the city maintain a core ‘in’ scenario, the chances of an ‘out’ vote have increased and investors need to carefully consider the consequences of leaving the EU on their asset/liability mix.

Uncertainty is the name of the game. No country has ever left the EU before, so there is little real understanding of what to expect following a ‘no’ outcome. The nearest comparison would be Greenland’s 1985 ‘soft’ exit that left it as an associate member, still subject to EU treaties, but the UK would be highly unlikey to accept a similar arrangement.

The lack of a recent precedent leaves it very unclear what the consequences of a Brexit would be.

UNCERTAINTY IS THE ONLY CERTAINTY

Roger Bootle, managing director of Capital Economics, speaking at the Pensions and Lifetime Savings Association Investment Conference 2016, said: “The fact of the matter is there aren’t facts. There are assumptions, there are views, there are factoids you can push or bend in a certain direction, but this is not something where you are going to get the objective truth.”

Capital Economics’ analysis of various surveys into the economic effects of Brexit revealed a 22% difference in projected gross domestic product (GDP) between the most extreme views. The high level of uncertainty this gap reveals is itself having, and will continue to have, an interesting effect on institutional investors, both on the asset and liability side of their balance sheets. And not all of that is bad news.

Bill Street, head of investment (CIO) EMEA at State Street Global Advisors, says the referendum is “undoubtedly the key risk event facing the UK this year”.

He adds: “The perceived risk of Brexit is likely to generate increased uncertainty in the markets, adding to current market concerns.”

Uncertainty manifests itself through greater volatility and an increase in the riskpremium demanded by investors, which, in turn, pushes down asset prices.

STERLING JITTERS

As the most liquid sterling asset, the pound is first to suffer the effects of greater uncertainty and has already taken a beating. Immediately after the Prime Minister’s announcement of the referendum date at the end of February, sterling fell 0.9% to a seven-year low against the dollar. It has since recovered some of those losses, but is clearly sensitive to the on-going Brexit issue.

GBP pairs dropped some 7% over a period of six weeks when David Cameron first promised to go to referendum, according to Clear Treasury, and Boris Johnson announcing for the ‘out’ campaign on Sunday 21 February saw GBP pairs almost 1% lower versus their Friday close.

Jean Medecin, member of the investment committee at Carmignac, believes sterling remains the “weakest link where Brexit is concerned”. “It’s already softened as the prospect of Brexit seemed to increase. If that trend continues sterling will suffer more,” he says.

Page: 1 2 3
0

Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!