Investors are increasingly likely to dump UK assets between now and the start of the Brexit negotiations, affirms the boss of one of the world’s largest independent financial advisory organisations.
Nigel Green, founder and CEO of deVere Group, is speaking out after the British Prime Minister, Theresa May, outlined the timetable to commence negotiations. She indicated that she would trigger Article 50, the clause needed to start the Brexit process, by the end of March next year.
Mr Green comments: “There’s an uncertain road ahead for the UK in the run-up to Britain’s formal divorce proceedings with the EU.
“Until the talks start, there will be no clear answers to the important questions about the UK’s future relationship with the EU or the rest of the world and this is going to create ongoing uncertainty.
“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.”
He adds: “One asset class that is likely to remain largely unaffected is UK property. This remains highly in demand by UK and overseas investors due to the ongoing fundamental strengths of British residential property investments and because of the fall in the value of the pound.”
Mr Green goes on to say: “In contrast, investors are now more likely to increase their exposure to other international markets.
“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.”
The deVere CEO concludes: “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.”
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $10bn under advisement.