EU Referendum ‘Leave’ outcome.
Going into the referendum, portfolios managed by Cornelian have been cautiously positioned. Furthermore, it is important to note that our investment mandates are global in scope and invest across a wide range of asset classes and this diversification will help dampen the effects of the market sell off.
Following the win for the ‘Leave’ campaign, political uncertainty in UK and the European Union has increased markedly.
Questions that arise from this outcome include:
Given the uncertainty, there has been a flight to safety with government bonds and gold being bought aggressively, whilst equites and Sterling have been marked down significantly.
However, unless there is a serious loss of confidence across the Eurozone and no measures undertaken to bolster activity, we do not believe that the ‘Leave’ vote will impact global economic growth by as much as markets are pricing in this morning.
We also believe that central banks will be quick to step in to support asset prices through additional monetary policy measures.
We are, therefore, looking to exploit some of the valuation anomalies that are materialising from the market dislocation. After all, there are numerous good quality, UK listed, global companies, which will be benefit if there is a prolonged period of Sterling weakness.