Five views on a ‘no deal’ Brexit
By Sebastian Cheek, Kristen McGachey and Jessica Tasman-Jones, 3 Aug 18
Experts look at how investors can position themselves if the UK crashes out of the EU
“First, I think it highly unlikely that Britain would crash out of the EU without some form of deal,” said OMGI’s Buxton.
“There may be several crisis moments along the way, and any deal may well split the Conservative party, but it is more likely we have a deal than not, in my view.
“However, in the event of a no-deal Brexit, I believe sterling would weaken further, so to the extent that my fund is significantly exposed to multi-national companies across oil, mining, pharmaceuticals and banking, this would provide some offset to any operational difficulties with cross-border transactions as their reported results would be boosted by currency translation. For this reason, it is unlikely that I would make major changes to the portfolio.
“That said, as we saw after sterling’s depreciation post-referendum, this would probably see inflation rise over the subsequent 12-18 months, which would squeeze real incomes and undermine consumer spending, affecting retail and leisure stocks.
“Supply chains could be disrupted if freight movement by air or sea was subject to border checks, which could impact food and clothing retailers, as well as UK industrial companies – although many of these have extensive manufacturing facilities overseas. The fund is not significantly exposed to UK manufacturers, whilst with retailing exposure at least this would be an issue faced by all: it is unlikely to create relative winners and losers.”
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