Brexit risks are overestimated.
The pound depreciated significantly after the Brexit decision. "This will stimulate the economy," says Christian Jasperneite, M.M. Warburg: "British assets offer positive surprise potential."
Have you followed the current forecasts of economists on developments in Great Britain? Then you've probably noticed that most analysts have started to raise their expectations for economic growth on the island. In fact, three months ago they were still assuming a meagre increase of 0.9 percent for the current year. Today, the estimate is already at 1.4 percent;
I'm not surprised by this optimism. What surprises me, however, is the fact that the markets, and in particular the British Pound, do not reflect this turn for the better. But this is precisely what investors can exploit. Brexit is an opportunity that many market participants do not yet seem to have on their screens.
It is now clear that the new Prime Minister Theresa May will lead Great Britain from the European Union (EU). The exciting question now is how it will position the country in the world in the future. She doesn't have a bad hand in this. The United Kingdom has - also because of its colonial past - a stable international network on which it can build in its repositioning. In plain language, this means that instead of only having duty-free access to the European internal market, Britain could in the medium to long term trade freely and unhindered with the whole world.
Germany's example illustrates just how important this is. In recent years, we have recorded the strongest trade growth not with the countries of the single market, but with countries outside the EU - emerging markets, China and the USA;
Once it is clear that no major losses are to be feared in trading, investors will be more aware of the opportunities offered by Brexit. And there's a lot of them. After all, Great Britain can present itself as a deregulated location in the future. It may pursue its own independent monetary policy. Es will break away from the strict and complex requirements from Brussels. Die Government can focus on the migration of highly qualified workers through a policy of selective immigration. And it can enter into fierce tax competition with the EU. Lower tax rates can create massive incentives for companies. This should at least partly compensate for the disadvantages of a possible emigration of companies.
I find it particularly interesting that many investors currently rate the supposed problems of Great Britain much higher than the fact that the EU continues to move further and further in Richtung of a transfer union. Imagine that there will be renewed turbulence in the EU, which is not unlikely in view of the upcoming elections and the high indebtedness of many member states. Könnte maybe then the UK will become the safe haven in the old world from a European point of view and establish itself as "Singapore of the North Sea"?
Of course, I also know that the country is currently suffering from capital outflows and high current account and budget deficits. However, the negative consequences of this situation are already reflected in the low exchange rate of the British pound. If the government succeeds in designing a viable future model for the country, of which I am convinced, we will soon see a reversal of capital flows.
I therefore see more opportunities in British assets. According to analysts' consensus estimates, corporate profits, for example, are expected to grow by 18.7 percent this year. For investors from the euro zone, this promises rising prices on the stock market and an additional return in British pounds.
So don't be misled by the current very negative Brexit discussion. In the case of investments in Great Britain, the opportunities are currently much greater than the risks. An investment there will pay off in the medium to long term. ®