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- Rotation to large caps ‘uncomfortable’ but creating opportunities
- Avoiding the next Vocation: Five “watch outs” for selecting stocks
- Stocks to watch in an uncertain market: CSL
- Two big takeouts for investors from 2016
- Five reasons why absolute return investing is less volatile than index investing
- Six keys to finding value in the market
- Brexit: Implications for investors
- Difficult start to 2016 for share market – opportunities exist for high conviction stock pickers
- Prime Value’s views on current market volatility
- Short-term cycles to continue into 2015
- Some stocks cope with volatility better than others
- Reporting Season Underlines Need For Strong Fundamentals
- In the world of finance, the most dangerous thing is the thing that never moves
- 2014 shaping as a stockpickers market
- Dark Clouds On The Horizon – Risk Or Opportunity?
- Three Chances at Getting it Right
- Keeping on top of the RORO markets
- Notes from China
- Spring Cleaning The Investment Pantry
- Does Corporate Memory Have A Role In Stockpicking?
- How Do You Harvest Your Returns?
- Why Avoiding the Herd is More Important than Ever
- Safe Bets In Turbulent Times
- History: First Multinational Renaissance Business
- How Bees Invest
Brexit: Implications for investors
ST Wong, 27 Jun 2016
Britain’s surprise decision to leave the European Union will cause some market volatility, and also produce some buying opportunities.
Brexit does not point toward a systemic financial crisis like the GFC. But the short-term outlook for Australian shares may be unsettled as the drama reverberates through the market. We observe that stocks with UK businesses, fund managers and institutions with capital markets businesses have endured the largest sell-offs. Our portfolios generally have low exposures to these stocks.
It would be reasonable to expect the UK to post no economic growth for the next few quarters and for EU economic growth to slow. Equally it would be reasonable to expect the Bank of England and European Central Bank to ease monetary policies to aid growth.
Likewise the decision could influence the Reserve Bank of Australia to consider lower interest rates, along with the US Federal Reserve.
We have worked through many crisis situations as an investment team, including the Global Financial Crisis (GFC) in 2008, the dotcom market crash in 2000, and the Asian Financial Crisis (AFC) in 1998. We take many lessons from these experiences.
Experience tells us to look for signs of stress in global liquidity and for contagion – we believe they remain no more elevated than that to be expected for such an event. Liquidity is particularly important and there are no suggestions of widespread liquidity constraints at this point.
There has been no shortage of market volatility this year. Market movements can provide opportunities in companies we find interesting. In this way, volatility offers an incentive for us to act on opportunities in companies, which have strong management and can deliver share-holder value regardless of macro trends. We believe we can prosper by diligently searching for quality companies selling at attractive prices in volatile markets, and in passive ones.