Brexit Referendum result – Investment perspective

The people of the UK have voted in favour of leaving the EU and this has had an immediate impact on the markets. At the time of writing, the areas most affected are mainland EU markets and the sector with greatest impact has been the banks.

Risks mitigated well before the referendum

Aisa – the parent company of the OpesFidelio network – took action in the previous two quarters to protect our portfolios in case the potential of ‘Brexit’ caused market volatility and to protect against the event of a vote to leave. Earlier in the week of the Referendum, we published our views through blogs and we have made it clear that we had taken actions which reduced equity exposure, increased the flight to safety, invested in gold and ensured that we had a well-diversified portfolio. Of course we cannot claim that our portfolios will not decrease when the world markets all decrease but we anticipate them continuing to outperform their benchmark indexes.

Track record and risk

The Aisa Investment Committee has a strong track record of successfully adapting to changing markets and the evolving world around us. Consequently, we have the required measures in place to help ensure we can continue to support our clients as the future negotiations develop. As a business, we already operate successfully across many borders in the EU and elsewhere in the world. One strategy that has been widely suggested is for people holding money in cash should now consider investing in the new market lows. As the Bank of England provides support we anticipate banking shares will recover for example. This may be a strategy we follow but for now our portfolio recommendation is to Hold, rather than Buy or Sell.

Property and inflation

A weak pound will likely lead to import inflation and therefore UK inflation could increase. Interest rates may increase to strengthen and also suppress future inflation and this in turn will increase costs on loans and debt eventually. This, combined with a lack of inward investment, could lead to an impact on property prices both commercial and residential in the future.

People receiving income overseas from the UK

Impact is likely to be high on these individuals, although some of the initial losses on currency are likely to be reversed in the coming weeks and months. Now is a time when people overseas require more assistance and help from professional advisers than before.

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