With polls indicating the 23 June vote will be a close call, uncertainty has hit the value of Britain’s equity, property and currency markets, all potentially impacting expats with investments in the UK.
“This is one of the closest votes in UK history and that has left much uncertainty when it comes to investments and finances. Investors may be unsure of exactly how their finances will be affected but the key is to prepare either way so people are not left short after the vote,” said Hamzah Shalchi, GWM regional manager.
Although UK investments will feel the heat in both results, it will be more so in the event of an exit and financials will be at the forefront as their regulation at present is highly dependent on EU law, said GWM. The company warned that if the outcome of the referendum is ‘Vote Leave’ then a sterling sell-off on the stock market is highly likely, with the pound potentially losing a third of its value.
Advice: GWM advises expats with investments heavily weighted to UK stocks to look at moving into cash to minimise potential losses. Monthly savers with long-term investment plans will unlikely be affected so they should carry on with what they are already doing. In fact, ‘Vote Leave’ may even be beneficial because they will get cheaper units in the ensuing months, this creates-dollar cost averaging.
Although staying within the EU will surely increase confidence among expat investors, there will likely be some trade and trust issues within Europe, according to GWM.
Advice: GWM advises people to implement a solid strategy to ensure they have a well-diversified portfolio. Portfolios with portions allocated to low-risk assets have proven to weather even the most market-impacting events, as well as equities that deliver a greater tendency for higher returns over the long term.
Another positive is that if the UK chooses to stay in, it will outperform Europe in the markets due to underperformance over the past year, therefore a ‘Vote Remain’ result is a great time to invest in UK shares.
Investment tips for all expats regardless of the vote
Do not invest anything over the next four days, sit on your cash and wait for the results.
People who are already invested should be locking in their profits to make sure they are no longer exposed to risks
Be ready to make decisions quickly and communicate more than normal with your IFA or broker .
Do not speculate in the currency market for the next two weeks, it is too risky and you can easily be caught on the wrong side
Shalchi said: “No one can really say which way things will go in the vote on June 23, however, the most important advice expats can take on board is to keep informed and keep on top of their investments, rather than burying their head in the sand and seeing the financial impact in months or years to come.”