Fifth of investors plan to cut UK assets over six months due to Brexit

Almost one in five investors plan to cut their share of UK assets over the next six months as Brexit nears, a survey shows.

US bank State Street published its quarterly "Brexometer" on Monday, a survey of banks, insurers and other institutional investors' views on the UK's plan to leave the EU.

The current issue shows that 19 per cent of investors plan to reduce their holdings of UK assets over the next six months.

Exactly one third of them believe that the owners of those assets will want to cut their exposure to the UK over the next three to five years. However, 28 per cent believe that the opposite will happen, and say that investors will want to increase their UK holdings over that time frame.

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State Street surveyed the participants between March 29th and April 19th, the weeks following the UK’s triggering of article 50, the treaty provision governing how member countries leave the EU.

The bank found that 31 per cent of finance companies said their firms would cut their operations or presence in the UK as a direct result of its government’s decision to trigger article 50, but one in 10 of them would increase their business there.

At the same time, 80 per cent of these companies believe that Brexit will change how their businesses operate in the UK.

Michael Metcalfe, head of strategy at State Street's global markets division, said the long-awaited Brexit slowdown was showing only "tentative" signs of materialising.

Six months

“The majority of our respondents, 65 per cent, still have no plans to reduce their holdings of UK assets in the next six months. And while 78 per cent recognise Brexit will impact their business operating models, less than a third think it likely they will reduce their operational presence in the UK because of it.”

His colleague, Bill Street, head of investments for Europe, Middle East and Africa, said that UK prime minister Theresa May's decision to call a snap election was more significant than the article 50 talks.

“Markets had already discounted tough negotiations and a ‘hard Brexit’ so have welcomed the prospect of a stronger and less-hurried government undertaking Brexit negotiations,” he said.

Mr Street said investors should remain vigilant as the Brexit talks would mean continued market volatility.