Talking Point  

Advisers disregard Brexit when it comes to UK market

Advisers disregard Brexit when it comes to UK market
 Pexels/Anthony Beck

The outcome of the ongoing Brexit negotiations are not a major consideration for advisers when assessing their client’s exposure to UK equities, according to the latest FTAdviser poll.

The poll showed that while advisers are almost evenly split on whether they are positive about the outlook for the UK market in the year ahead, Brexit is a defining issue for less than a third of those polled. 

The data shows that 37 per cent of advisers are likely to increase their exposure to UK equities in the year ahead, while 33 per cent do not expect to. 29 per cent say their exposure to the UK will depend on the result of the Brexit process. 

 

The FTSE 100 tends to have an inverse relationship with good Brexit news, that is, it falls when the market believes a deal is happening. 

This is because a deal would cause the value of sterling to rise, and the bulk of the corporate earnings in the FTSE 100 are generated in overseas currencies. The value of those earnings is lower if sterling is rising in value against the currency in which those earnings have been generated, making the share prices potentially less attractive.    

In the immediate aftermath of the Brexit vote in 2016, sterling fell sharply, but the FTSE 100 performed strongly.

david.thorpe@ft.com