Polls have never been perfect as evidenced by recent UK election forecasts. However, the trend that is developing as the Brexit vote approaches is evidently turning towards the ‘Out’ vote. And while neither camp is ready to commit themselves, the ‘Out’ campaign are gaining confidence while the ‘In’ campaign are relying more and more on the undecided margin.

Financial markets are exhibiting the uncertainty in the form of market volatility; which is expected to be the order of the day until the eventual result.

Possible Aftermath Issues

Possibly, following a Brexit vote, first out will be David Cameron and his disciples. An exit will probably re shape the political spectrum boosting UKIP, sending the Conservatives into disarray and forcing labour to rethink their ideology.

Scotland will probably call for a fresh referendum on independence from the UK in order to remain in the EU. Scottish independence following a Brexit is highly plausible.

An integral part of the Northern Irish peace process was the opening of borders between The Republic of Ireland and Norther Ireland. The UK would have to balance between keeping an open border and a gateway for immigrants, or closing the border and reigniting tensions.

Britain will have two years to negotiate its way out of the EU. In the meantime current agreements will remain in place. At the core of the negotiations will be the free trade agreement.

The post referendum debate will definitely include level of contribution required to remain in the free trade area. Many economists rightly retort “why all the hassle when the UK is going to continue contributing into the EU budget anyway.”

Investment considerations

Under the circumstances investors may consider;

Playing the vote; investors may be convinced of the vote going one way or other. Investors placing their bets on ‘Remain’ may gain from converting cash to Sterling or buying European Equities before the vote. The opposite is true.

Staying on the side-lines; experienced long-term investors are postponing investment decisions until the vote. Cash will be a valuable commodity if the ‘Out’ vote prevails. If the ‘Remain’ wins the positive reaction will be lost. However, for the long term investor, the short term movement should be negligible.

This article was issued by Antoine Briffa, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.  

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