Investment/market implications of Brexit extremes...?

[WindyCommon]

Dare we try a gedankenexperiment exploring investment themes around the perimeters of Brexit...?

With the attempted middle-way Chequers proposal perhaps looking increasingly unloved (widely referred to as BINO, Brexit in Name Only etc) on both sides of the debate, perhaps it’s time to consider the market implications of the alternatives.

At the two extremes we have two scenarios:

(a) a true no-deal Brexit
(b) a decision to remain in the EU

What do PH’s contributors think are the market implications of each scenario? Relative to today, and looking 1 year out to this time next summer, what do you think would be the short-term impacts of each scenario?

Some markets/areas to consider...
- Domestically focussed equities (let’s say FTSE 250)
- Internationally focussed equities (FTSE 100)
- European equities (sat STOXX50)
- Exchange rates EURGBP, GBPUSD, EURUSD
- Domestic interest rates
- Domestic inflation
- Property (Resi and Commercial)
- etc

There are many insightful and thoughtful posters here in the Finance Forum. My hope is only to spark an interesting discussion on market implications and investment themes around Brexit, not to debate Brexit itself! I have taken a deep breath before hitting “Submit”...

[JaredVannett]

WindyCommon said:

At the two extremes we have two scenarios:

(a) a true no-deal Brexit
(b) a decision to remain in the EU

Good topic!

I'd be interested to hear opinions on the outcome of the above using probabilistic reasoning.

Some discussion on possible 'scenario plays' would be good too. For example... if option 'a' happens, then will sterling dive making a case to buy FTSE100 shares?

Of course, there is the possibility the market will already factor in such things before official announcements, still fun to prospect over though.

[Helicopter123]

WindyCommon said:

Dare we try a gedankenexperiment exploring investment themes around the perimeters of Brexit...?

With the attempted middle-way Chequers proposal perhaps looking increasingly unloved (widely referred to as BINO, Brexit in Name Only etc) on both sides of the debate, perhaps it’s time to consider the market implications of the alternatives.

At the two extremes we have two scenarios:

(a) a true no-deal Brexit
(b) a decision to remain in the EU

What do PH’s contributors think are the market implications of each scenario? Relative to today, and looking 1 year out to this time next summer, what do you think would be the short-term impacts of each scenario?

Some markets/areas to consider...
- Domestically focussed equities (let’s say FTSE 250)
- Internationally focussed equities (FTSE 100)
- European equities (sat STOXX50)
- Exchange rates EURGBP, GBPUSD, EURUSD
- Domestic interest rates
- Domestic inflation
- Property (Resi and Commercial)
- etc

There are many insightful and thoughtful posters here in the Finance Forum. My hope is only to spark an interesting discussion on market implications and investment themes around Brexit, not to debate Brexit itself! I have taken a deep breath before hitting “Submit”...

A 'no deal' Brexit would most likely see a re-run of the post-referendum trade.

Pound down, FTSE 100 up, windfall returns from international assets.

Expect BoE to flood domestic banks with liquidity, rates cut.

Decision to stay in the EU - the opposite. The problem however, is that this would most likely happen after the collapse of the May government and then you have Corbyn at the helm. That's a whole different thread on predictions.

The sensible trade at the moment is long-international assets IMO.