PLEASE NOTE: This article is the opinion of the author, Maurizio Piglia, and is not intended as financial advice. You should always seek independent advice, tailored to your unique situation and objectives, before investing.
It has now been more than a year since the Brexit transition began and, at Guardian Multi Family Office, my colleagues and I have been watching closely to assess what this means for investors in both the short and long term.
We believe that, while Brexit creates some risks that investors and their advisors should take into consideration, there is opportunity for those who take a global view in relation to growing their portfolio.
The following is our take on how the changes have unfolded, what will happen next and, of course, how investors can potentially benefit from Brexit.
The initial market response to Brexit
Essentially, the markets blinked. However, after the initial ‘pause for thought’ trade returned to business as usual.
This happened for several reasons, but primarily because the economic numbers were in favour of the UK. With more imports crossing its borders than exports, the UK has a total Trade of Goods and Services imbalance of £108 billion – much of it with the EU.
This makes the UK a key market for EU countries, and ensures that they will continue to treat it as an important trade partner. In fact, by negotiating bi-lateral trade agreements with individual EU countries (rather than the EU community as a whole), the UK will most likely emerge better off.
Europe’s likely economic future
While the EU has something to lose by cutting ties with the UK, the economic future of the region will remain largely unchanged in the long term.
It is expected that the nations with the largest trade surpluses, for example Germany, will forge ahead and work to create bi-lateral agreements directly with Westminster as quickly as possible.
Smart investors will be putting thought into how to best safeguard their current or planned European and British investments. The Euro and the EU will likely come out weakened by Brexit, which means UK assets and the pound should show an appreciation in the long term. This has already begun to show in relative prices, but there is still room for UK assets to appreciate.
Opportunities for investors
We believe the key Brexit-related opportunities for investors are actually to be found beyond the UK and Europe. More specifically, we believe investors should be considering how Brexit will impact both the UK and the EU’s trade relationships with other nations.
There are countries that may be able to close bi-lateral trade agreements with the UK faster than individual EU nations. This is because recriminations and other obstacles put in place by the EU in response to the Brexit decision will slow even the most proactive EU nations down.
New Zealand and Australia, for example, will have a clear head start. With the same set of laws, a common language and Commonwealth ties, these two countries are in a very favourable position to re-evaluate and grow their respective trade relationships with the UK. Of course, improved access to UK markets will create the right conditions for exporters from ‘down-under’ to flourish and deliver strong returns to investors.
About The Guardian Multi Family Office
The Guardian Multi Family Office is a boutique, independently-owned wealth management and financial advisory firm based in Auckland, New Zealand. Our approach is unique – by leveraging our significant expertise and our global network of financial contacts, we identify the best investments and domiciles to achieve our clients’ financial objectives.
Contact Maurizio if you want to discuss your own, or your clients’, investment needs.