Brexit and red tape scare advisers in 2018

In the light of failed UK companies such as Carrillion struggling to compensate for the loss of large-scale contracts - which some analysts have put down to Brexit - advisers have claimed uncertainty over the terms of the UK's departure from Europe is a big concern.

In a poll among financial advisers, 49 per cent cited Brexit as the biggest concern for 2018 and 38 per cent said ongoing regulation would pose potential problems over the course of the year.

Commenting on FTAdviser Talking Point's poll, property investment adviser Proactive Consult stated: "There are loads of regulations coming up and we have already seen many through. However, who knows which ones are in the pipeline?"

Despite concerns, some fund managers and wealth advisers believe the initial shock effects of Brexit, such as the fall in sterling and the subsequent rise in inflation, will dissipate over the course of the year.

When a market correction comes, it will be sudden and savage as real fear returns.Guy Stephens

David Hillier, portfolio manager in the multi-asset strategy group at Insight Investment, part of BNY Mellon, said: "In the UK, consumer and producer price data should show a continued decline in rates of inflation – in part as the impact of a weak pound post the Brexit decision unwinds."

Oliver Wallin, investment director at Octopus, also expressed positivity after three "key sticking-points" were resolved in terms of getting Brexit-ready.

He said: "Brexit negotiations moved on with the three key sticking points seemingly being resolved: the divorce settlement bill, rights of European Union citizens and the Irish border.

"Discussions can now move onto trade and discussions about the type of agreement the UK wants. There was talk of a transition period, which will be welcomed by business, and would take some of the time pressure off. All eyes will be on the next round of negotiations."

The concerns came as the FTSE 100 maintained its strong run, up 5.86 per cent year-on-year as of 15 January, with few signs of this abating, even given the bad news over construction companies.

Russ Mould, investment director at AJ Bell, said: "No signals look to be flashing danger – if anything all are flashing green for go.

"However, after what is now almost a nine-year bull run in UK stocks, this could be a reminder of Warren Buffett’s aphorism the right time to be fearful is when everyone is greedy and the right time to be greedy is when everyone is fearful, and right now there is little, if any, fear in evidence."

Guy Stephens, technical investment director for Rowan Dartington, said no matter what the fears: "For the time being, investors are remaining invested, mainly in equities and bonds, because there are few available alternatives.

"While there are no dark clouds with respect to earnings on the horizon, everyone is prepared to ignore the valuation concerns and keep their fingers crossed.

"When a market correction comes, it will be sudden and savage as real fear returns. Any investor who is not prepared to remain invested for the longer term and needs to crystallise value within the next couple of years should be careful indeed and consider a staggered programme of crystallisation rather than continue to ride the wave in anticipation of perfect timing. 

"Arguably, the longer the bull market runs, the more savage the shock when it ends."

simoney.kyriakou@ft.com