Brexit will weigh on stocks into next year, poll reveals

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Aug 29, 2019

Britain’s anticipated Halloween exit from the European Union will continue to spook UK stocks into next year, a poll by Reuters has revealed.

A no-deal Brexit, the deteriorating global economy and the US-China trade war were cited as top reasons for the subdued outlook for UK equities.

The survey of 22 fund managers, investors and analysts was carried out between 13 August and 27 August.

The news organisation says Britain’s top stock index is expected to reach 7,300 points by the end of 2019, just 3 per cent higher than current levels.

It would represent an 8.5 per cent gain for the year, partially reversing the more than 12 per cent decline seen last year.

But it highlights the figure is down from the 7,499 estimated in the last poll in May and suggests this coincides with confidence deteriorating since Boris Johnson took over as prime minister.

The latest survey was taken before Johnson’s move to shutdown parliament, which some suggest is to prevent MPs from delaying Brexit.

By the middle of next year, participants expect the index to have dipped to 7,225 but then reach 7,570 by the end of the year. That would represent a near 4 per cent rise from the estimated end of 2019 level.

Brooks Macdonald deputy chief investment officer Edward Park tells Reuters: “Until the fate of the UK/EU relationship is known we expect fundamentals to be ignored and global asset allocators to continue to shun UK risk assets.”

Reuters graphic

The estimate for year-end levels would mean Britain lagged its European and US peers, which are both heading for double-digit percentage gains this year, Reuters says.

It outlines that since the 2016 vote to leave the EU, British stocks have “severely underperformed the world in dollar terms”.

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