Chch Investor Meetup, 25 June 2016

The week and many coming weeks to come would be rather pre-occupied with the topic of Brexit. We did what many would do, speculate and pontificate on the impact of Brexit, where things would go from here.

The Brexit event offers an opportunity in observing extreme market behaviours, one that occurs rarely. While much of the market discount have not reached extreme levels, the anxiety created is perhaps greater, as anticipation and updated expectations begin to take hold.

Now, from an investor seeking opportunities point of view, what are the things to look out for, if one were to seek such to benefit from such a change in structure? Let’s look at some of the hypothesis.

1. The major expected change is that the financial hub of Europe, which is currently in London, would in a post-Brexit world, start moving to other cities. Dublin, Frankfurt and Brussels are some of those noted. There are over 700,000 financial services workers in London, and should 15% of them being based there due to EU reasons, the migration of more than a hundred thousand people and their families are definitely going to introduce a huge demand for moving services, real estate service, schooling arrangements, banking, taxation advisory, office setting up and other related services.
2. Dip in luxury goods, services market. With such volatile market movements, big ticket and luxury products companies would generally take the first hit, you can scan back at previous market crises to discover the correlation.
3. Should the regulations impact immigration laws due to the next post-Brexit structure, expect an increase in demand for immigration law advisory services.

Over the long term though, nothing has really changed for the value investor. There might be some good companies that would become better priced, though you’d still need to keep abreast of the performance over time to be able to make a decision to invest.