WHEB Commentary

George Latham

UK votes to Brexit


For the second time in recent UK election history the polls have been misleading.  Over the past week, as well as opinion polls firming, both the betting and financial markets have been indicating a vote for remain with increasing confidence. This turns out to have been misplaced.  As a result, both stock and currency markets are experiencing significant volatility this morning as it becomes clear that the UK has voted to leave the European Union.

Clients will be concerned amidst the news of market gyrations and sharp currency moves.  In the short term at WHEB we are likely to do very little trading on our underlying investments.  As a genuinely global equity manager, our portfolio has relatively low level of direct exposure to UK listed stocks (7.9% as of 23rd June 2016), with more than 60% of the portfolio invested in US stocks.  Although global markets are likely to move lower today, the weakness of sterling against the US dollar would have a beneficial impact on the value of US portfolio holdings when translated back into GBP.  This effect is likely to dampen some of the impact on overall portfolio values.

Apart from the general risks to the macro economy from the referendum result, the implications at the stock level are less clear as we do not yet know what form a Brexit will take.  As long term investors we will continue to evaluate the risks and opportunities for all the holdings in our portfolio and stocks across our wider universe on a case by case basis with an eye on longer term fundamental value.

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