Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. INVESTING & PORTFOLIO STRATEGIES
June 24, 2016 01:00 AM

Brexit wins: British stocks will prove winners, too

Donald G.M. Coxe
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Bloomberg

    In this media-drenched world of exclamations, superlatives, exaggerations and obscenities, we are inclined to protect ourselves by mentally scaling down the volume and the scope of reports of events and achievements — or the likelihoods of shocking outcomes.

    The lead-up to the Brexit vote was one of those experiences. I had only lately come to believe that, in the long run, Britain's leaving the European Union would prove beneficial to the Brits, and might wake up the 'eurocrats' in the EU. Very soon after my “conversion,” the exit contingent shocked the political and financial elites of Europe and the United States by pulling ahead in the polls.

    Then, a week before the vote, came the hideous slaughter of Jo Cox, a new star in the British Labour Party, by a mentally unsound loner.

    The polls swung back to a lead for what were somewhat bizarrely called “the Remains.” (It turned out to be a prophetic appellation.)

    There was never any reasonable doubt that an English exit would be a big blow to the British economy, and a wake-up call to the eurozone.

    For months, “the Leavers” had little to make their case except immigration seemingly out of control, and sourness at the elite class of Brussels bureaucrats. The Remains dominated the business and communications classes, so the intellectuals, columnists and business bosses backed the majority of politicians in claiming Brexit would be a disaster.

    The British have pride in their past: For centuries Britain ruled the waves, and managed to avoid most of the Continent's wars, protected against invaders by its navy and the English Channel. (One aging officer said, “God gave us this ditch. Why do they keep trying to fill it in?”)

    Then, in March, Boris Johnson, a witty, scholarly and winning intellectual Tory politician switched sides, joining the leave camp. He is now ranked as the political phenom who might have brought down Prime Minister David Cameron and changed history.

    In the weeks before Ms. Cox's murder, the pound was being pounded and gold was rising again, having risen 16% in the first quarter to be crowned the No. 1 asset class in terms of performance. As of midday June 24, the price of gold in London was $1,318 an ounce, making its year-to-date return 24%.

    Near-term, the biggest losers are the economists and business leaders who warned of disaster in apocalyptic prophecies that the general public tuned out. The International Monetary Fund joined in, predicting a non-EU Britain's gross domestic product would be 6.2% lower, or 93.8% of what it would be in 2030 than if the country had stayed. The IMF announcement was ludicrous, because it hasn't gotten one-year GDP forecasts accurate for years. The bettors lost big, betting as much as 5-1 against Brexit. Now, Scotland and Northern Ireland may decide to exit Britain in favor of the EU.

    The story now moves to years of bargaining between Britain and EU, and the fallout and recriminations will multiply.

    Britain must try to stitch together new ties to an infuriated Europe, which buys 45% of its exports, while seeking far closer trading relationships with the English-speaking allies she has fought beside in past wars.

    The United Kingdom will wait to see how much of its banking and finance community in the City of London and its West End decamp — as threatened — to Europe. Late in the debate, France announced it would ensure that England was severely punished for the damage it was inflicting on the European Union directly, and by energizing nationalist upstart parties — some of which are truly toxic. It proposed Paris (surprise!) as the replacement for London as the center of finance and trading. This farrago of bile came when Paris was again shut down by riots — by a far-left union — against very modest adjustments to the extremely generous pensions that are far too costly.

    The European Central Bank and the Brussels bureaucrats are in shock. Radical parties in France, Italy, Holland, Poland and Hungary — which protest the immigrant tide, the powers of the ECB and the Brussels committees, and cheered for Brexit — now call for their own version. The euro might soon move back into the emergency ward, putting more upside pressure on the dollar.

    The European Union has been China's biggest customer. No surprise that Xi Jinping, president of China, toured Europe encouraging a good outcome in the Brexit debate, meaning a ringing defeat of Brexit. This setback comes at a time when the Chinese economy is being buffeted by bad news from so many directions — external and internal. Time for distraction: China is stepping up activities in the South China Sea with the West bedeviled by Brexit.

    Investors should expect more turmoil in global financial markets, and even more issuance of negative-yield bonds from the ECB and other European authorities. Chances of a global recession increase when there are, in the short term, so many economic losers from the shock of l'Affaire Anglaise, with Europe still in the recovery ward from the crash of 2008.

    The Fed's chance for a rate rise vanished with the voting result.

    Gold and silver stocks will keep moving to new recovery highs. American stocks and bonds will find more global buyers, because the U.S. economy should not suffer painful shocks.

    There are — for now — more losers than winners from Brexit. The clearest winners are those who wish to protect Britain's uniqueness and sense of history while paying a short-term price for the privilege. Many British stocks purchased in coming weeks by long-term investors will prove winners.

    There are two less savory winners: Vladimir Putin and Donald Trump are smiling.

    Donald G.M. Coxe is chairman of Coxe Advisors LLC, Chicago.

    Related Articles
    U.S. managers' stocks plummet after Brexit vote
    Brexit vote causes U.K. pension plan deficits to soar 10% — Hymans Robertson
    Managers finding opportunities as markets tumble after U.K. votes to leave EU
    Managers finding opportunities as markets tumble after U.K. votes to leave EU
    Sustainalytics: Brexit could impact some ESG regulations
    U.K. markets and currency continue to drop; growth forecasts slashed in wake of…
    Asian markets 'orderly' as Brexit reinforces lower-for-longer theme
    Managers, funds jump into action
    Post-Brexit caution: hoping to avoid a long-lasting downside
    Pension clash looms as Ukraine opposes IMF on retirement age
    Recommended for You
    More funds testing water on crypto-related assets
    More funds testing water on crypto-related assets
    Money managers eager to make leap to opportunity zone investing
    Money managers eager to make leap to opportunity zone investing
    Index investing: Not as passive as you might think
    Index investing: Not as passive as you might think
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 23, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference