Institutional investors unanimously back post-Brexit London as global financial powerhouse
Institutional investors are unanimously backing London as the global financial center post Brexit, which is aligned with FinanceFeeds predictions. Mergers and acquisitions are on the cards, with North America being the favored partner, and Britain’s institutional, interbank and fintech businesses are set for a very bright future.
It is certainly reassuring when a prediction is correct, and in the case of London’s status as a financial center post Brexit, FinanceFeeds was indeed absolutely right.
Earlier this week, FinanceFeeds CEO Andrew Saks-McLeod spoke with two seasoned retail FX traders about the market conditions during the EU referendum period, explaining how Britain’s economy and financial market ecosystem is likely to go from strength to strength post-Brexit.
As with any very important geopolitical event, the United Kingdom’s decision to leave the European Union being one of the most poignant in the last 45 years, there is always likely to be volatility in currencies and stocks of companies listed on national exchanges, however we pointed out that London will become the destination for all modern business, ranging from the innovation of financial technology by ingenious startups nestling in the shadows of the glass towers of London’s global financial center, to investment in publicly listed British companies, right the way through to a strengthening of London’s position as the home of the world’s major financial institutions.
Today, the results of a poll of institutional investors which was conducted by international management consultancy and professional services company FTI Consulting, have proven this to be absolutely right.
over 66% of institutional investors which participated in the FTI Consulting survey are certain that London will not lose its status as the world’s most important financial center.
Another important factor that was covered was the loss of value of company stock listed on the FTSE 100 exchange that had occurred due to market volatility around the Brexit period.
FinanceFeeds predicted that the value of British stock would not only soon rebound, but would become even stronger. This view has been backed up by institutional investors, and the FTSE 100 itself which finished up 3.6% at 6,360.06 yesterday, its highest closing level since April this year.
Peter Hargreaves, one of the founders of Britain’s largest financial services company Hargreaves Lansdown which has a market capitalization of over £6 billion is publicly pro-Brexit, and was lambasted yesterday by some pro-remain news sources which stated that he had backed a campaign to leave the European Union by providing £3.2 million in funding, only to find that the share value of the company had gone down from 1,389p ahead of the vote to 1,056p on Monday this week wiping £400 million off the market value of the company in two trading days.
This was a short-sighted analysis indeed, as Mr. Hargreaves, one of Britain’s most astute businessmen who although retired from his leadership position at Hargreaves Lansdown, is still a major shareholder, has looked to the long term and clearly understood which way the markets will go when considering the future of a British company which has a solely British client base.
Hargreaves Lansdown operates a proprietary platform called Vantage, from which British retail investors can manage their own portfolios of investments across all asset classes from one platform. The company also operates HL Markets, which is a white label of IG Group.
Mr. Hargreaves yesterday publicly stated that has “no regrets” on backing the Brexit campaign. “I didn’t do this for personal gain. I thought it would first and foremost be good for Britain” said Mr. Hargreaves in a statement yesterday evening.
He said the fall in sterling would be good for FTSE 100 companies whose earnings are translated into sterling. The pound was worth around $1.34 on Wednesday, down from around $1.50 just after the polling stations closed.
“It will be the biggest stimulus for British business that I’ve seen since 1992. It’s going to make them very profitable.”
The words of a very insightful leader indeed.
Investor confidence in publicly listed stock
The more UK-centric FTSE 250 index remains nearly 8% down, however, reflecting the lingering effect of post-referendum uncertainty. The British pound is still below $1.35, compared to $1.50 a week ago, however we believe that the British pound will become a very sought after currency in the near future.
Mergers and acquisitions on the agenda as Britain’s industry set to flourish
Seven in ten of those surveyed by FTI Consulting expect mergers and acquisitions (M&A) activity to increase for UK-listed stocks as sterling drops, with North America identified as the most likely region to show interest.
The majority of respondents expect industrials to be the top targeted sector, followed by technology, consumer goods and healthcare. Between June 27 and 29, FTI Consulting surveyed 100 global institutional investors with more than $8 trillion of assets under management.
More than half (53%) expect the UK to retain access to the EU’s single market. Although 76% believe UK trade with the EU will decrease, 59% said they expect trade outside of the EU to increase.
Peter Cruddas, Founder and CEO of CMC Markets is another pro-Brexit industry leader, whose company is similarly prominent among Britain’s financial sector as Hargreaves Lansdown, with its $100 million proprietary trading system and £6 billion market capitalization.
Mr. Cruddas, who made his £1 billion personal fortune from his own efforts with no investors or help from anybody by founding CMC Markets in 1989 with £10,000 that he had saved, has demonstrated his confidence in London by recently floating 31% of CMC Markets stock on London Stock Exchange’s main market, and then paying £42 million in cash for a Victorian mansion in West London’s Mayfair district.
Mr. Cruddas not only considers that a Brexit would stimulate British business, but also create secure employment.
The fund managers also look toward a bright British future
Savvas Savouri, Chief Economist at Toscafund sent a message to investors yesterday advising them to dismiss what he termed “alarmist” talk that the UK will enter a recession following its exit from the European Union, and explained that Britain has many opportunities.
Mr. Savoui had predicted a growth in the GDP of Brtiain of between 1.8% to 2.2% during the year 2017 which actually goes against what many economists had said.
Adding to this, FinanceFeeds believes that, despite some commentators stating that a number of companies from Britain may relocate to the European Union, this will not happen.
London is the global economic powerhouse, and freed from the bureaucratic shackles of a socialist union, its highly advanced, avantgarde institutional financial sector, dominant interbank FX indutry and associated technology business will flourish and continue to lead the world.
Photograph copyright FinanceFeeds