Q&A: Staying focused through Brexit
We talk this week’s big news about a parliament suspension with the Coutts investment team.
3 min read
Mohammad Syed, Head of asset management
Monique Wong, Executive director, portfolio management
Sven Balzer, Head of investment strategy
The word ‘prorogation’ doesn’t crop up much but has been firmly embedded in everyday parlance this week. The act of shutting down parliament is the latest development in the big Brexit drama, with the government getting permission from the Queen to do just that.
But what does it all mean for investors? What happens now? And how are our client portfolios and funds positioned for Brexit?
We spoke to three of our top investment experts to find out.
Q) Should investors be worried?
Sven Balzer: Our view is that investors should avoid the emotional roller-coaster and stay focused on their long-term investment goals.
As a result of this week’s developments, we will continue to see politicians being provocative to ram home their points. That’s their job. News headlines will also continue to be alarmist to attract attention. That’s their job.
But in our view the best approach is to take a step back from all the rhetoric and speculation, remain disciplined in your investment approach and stay focused on the fundamentals. There are still a lot of unknowns regarding Brexit. Even before parliament’s suspension was announced, it was uncertain whether it could successfully block a no-deal.
What matters is that Brexit will one day be resolved – believe it or not. And when that happens, however it happens, investors will have what they have craved since the referendum – certainty. UK assets will come back onto the radar of international investors, as will the fundamental qualities of many UK companies.
Q) What are the possible outcomes of Brexit now?
SB: There are still a number of possibilities. A no-deal Brexit has become a more likely option as the year has progressed, but ever since 2017 there has also been a groundswell of opinion against it. If that did happen, it could temporarily hurt the UK economy, which would be very hard for any government to stomach even if it came with fiscal stimulus and lower interest rates from the Bank of England. Rebel MPs are expected to use a range of tactics to prevent a no-deal when parliament returns next week.
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