Investors are likely to sell off UK assets in the wake of Theresa May’s March 2017 Brexit date, says the CEO of one of the world’s largest independent financial advisory organisations.
Nigel Green, founder and CEO of international financial consultancy deVere Group, says there is an “uncertain road ahead for the UK in the run-up to Britain’s formal divorce proceedings with the EU”, which is likely to create “ongoing uncertainty”. Prime Minister Theresa May outlined her timetable to commence negotiations in a speech at the Conservative party conference on Sunday, saying she would trigger Article 50 by March next year.
Green continued, “This uncertainty suggests a higher risk for investors and it can be expected that as a direct response many will dump UK assets as a precautionary measure.”
“This trend has already manifested itself. We saw sterling fall to a three-year low against the euro and its lowest level against the dollar since the beginning of July on Monday following May’s announcement. It’s a trend that will likely gain momentum as the start date for negotiations draws nearer.”
Currently the FTSE 100 is on course to hit at all time high, up 1.94 percent and soaring over the 7,000 mark as international companies benefit from a weaker pound. However, when negotiations begin, the FTSE may see its fortunes reverse.
However, Green highlighted the stability of the UK property market in the face of Brexit. He said property remains “highly in demand by UK and overseas investors”, largely due to the fall in the value of the pound.
Speaking on the wider investment market, he continued:
“Broader geographical diversification should be championed. Investing across geographical regions is an essential part of a well-diversified portfolio, and puts individuals in an optimum position to mitigate risk during times of market volatility, and make the most of the inevitable opportunities that present themselves.
“The more diversified the portfolio when a global approach is taken, the greater the reduction of overall portfolio risk.”
“An overriding general sense of how the UK will fare in the EU negotiations is developing. This presents risks and investors will be mindful of the ensuing uncertainty. As such, investors will be rebalancing away from the UK in favour of global stocks, bonds and perhaps property too.”