Wednesday, June 15, 2016

Are Your Portfolio Ready From A Brexit Event?

We are 8 days away from one of the most anticipated event in the history of the United Kingdom. 

The referendum will take place on 23rd Jun where people will go to a vote to decide whether Britain should remain or leave the European Union, which will bring about great repercussions to the global economy. 




One of the great repercussions would be towards the deregulation of the free trade zone economy amongst the EU Nation. Apparently, there are many companies that set up their presence in London in order to get an access to a closer economy towards the rest of the EU. Should the Brexit events take place, it will place a huge negative question mark on where they will go from here and trade presence will suffer in the short term. The exit and weakening GDP growth repercussions will have a massive blow to the global economy and every nation who has a trading partner relationship with the Britain. 

In the midst of all these uncertainties, we can also see the GBP slides down against many other currencies on fear that the unthinkable might happen. 

Some of the polls that have been conducted in recent week have suggested a close fight amongst the two parties, with those who are voting for a Brexit gaining momentum as we come closer to the D day. Popular bookmakers like Betfair and William Hill have also similarly cut short their odds from 8/1 (12.5%) on opening day to 7/4 (36%) on events Brexit would take place. In other words, they would still be expecting Bremain to happen with 2/3 probability while Brexit takes the other 1/3 probability. 

UOB has came up with a few lists of companies locally which has quite a bit of their portfolio exposed to the UK. I have two (Ascott and Ho Bee) out of the seven mentioned, so naturally I'll take an interested view on how these event is going to play out because this will have a fundamental impact to the company I'm holding.

Other than the 7 companies mentioned, I can remember a couple more like Lum Chang and UOL on top of my head which has exposure to the UK market as well.


My take is this will play out to be a non-event. On the day itself, the swing voters are likely to vote for the favorites because in a big event like this, the probability usually tends to favor the certainty.

I will probably have a couple of small bets trading the market on this based on my prediction that this will become a non-event but we'll have to see how it pans out closer.



8 comments:

  1. B,

    all these media hype is making this brexit is quite a close call.
    i think i will be buying GBP. it seems attractive entry point. for now.

    ReplyDelete
    Replies
    1. Hi FC

      Yeah I think it is quite a close call but in international standards, it'll probably will swing and favor the certainty.

      Delete
  2. Hi B,

    I cash out on CMPH earlier and sold FSL, holding cash to nimble with the volaity spiking. But so far, market seem to think it's a non-event too.

    I am happier if it's a non-event, but touch woods it is, at least I have some cash to deploy to accumulate stocks i like

    ReplyDelete
    Replies
    1. Hi SI

      You must be sitting on quite a few good cash right now.

      I guess regardless whether it's an event or not, life still goes on and opportunities still come by. Good job there on preparing enough cash. I need to do that soon.

      Delete
  3. Every few months we will have something new to worry. ha ha

    ReplyDelete
    Replies
    1. Hi Uncle CW

      You must have witness plenty of it everyday in your investment journey.

      Delete
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