(Br)exit and Your Investments: A Guide to Making the Right Choice

Posted On Wednesday, Jan 16, 2019


Brexit is the abbreviation of “British Exit” from the European Union (EU). Brexit mirrors the term Grexit - a term which was coined and used by two Citigroup’s economists in February 2012 to refer to the possible exit of Greece from the EU. Britain has had a troubled relationship with the EU since the beginning and has made various attempts in the past too to break away from it.

EU is a political, trade and economic union founded in 1957. It evolved over decades and reached its present model in 1992.There are 51 countries in Europe, out of which 28 countries have signed a treaty to become a part of European Union. So, clearly, there are countries in Europe which are not part of European Union.

Within Europe there is a concept of “Euro Area”. The Euro Area (EA) is a monetary union of 19 of the 28 countries which use the common currency “Euro”. Not all EU members use the Euro. Britain is an EU member, it is not part of the EA. It does not use the Euro and has retained its own currency, the Pound Sterling.

Indian businesses traditionally rely on the UK as their port of entry into the EU. The international trade law assured Indian businessmen that entry into the UK was an entry into the EU.

India invests more in the UK than in the rest of the EU combined. Indian companies that search for new markets beyond the UK will find it difficult for freedom of free movement of goods, services, capital, and labor. British ports won’t give them easy entry across the Continent. They’ll have to build their own ports through complex mergers & acquisitions. When Tata Steel bought the Anglo-Dutch company, Corus, it got them access to UK & Continental markets. Post-Brexit it’ll be very difficult for any company to achieve the same.

Presently, UK looks like it is not Okay with Brexit – the impending withdrawal of the United Kingdom from the European Union. Back in the mid 2016 the historic referendum was passed with 51.9 per cent of those who voted supported withdrawal. However, history has yet again being made with Theresa May's Brexit deal with the European Union getting resoundingly rejected by British MPs. With no clear way forward this is the largest government defeat ever in the United Kingdom.

Bank of England's Financial Policy Committee warned that uncertainty over the UK's membership of the EU posed risks to financial stability.

Brexit will impact business is known fact, but its implications are unclear. Consider how the pound behaved after the Brexit vote. The wide belief was that a failed vote will see the pound fall. But it actually gained. This is one indication that there is high amount of uncertainty. So what does this mean for you and your investments? What should be your take away from all this uncertainty around? Our Answer – Just sit back and relax. Investors with long term goals should continue focusing on their investments. Especially true for the value investor, as the volatility will strike the markets this will only open up better opportunities for you. Tackle such volatility and critical events by investing in Quantum's Long Term Equity Value Fund an open ended scheme which follows a Value Investment Strategy an ideal solution to keep worries off the table.

Product Labeling

Name of the Scheme & Primary BenchmarkThis product is suitable for investors who are seeking*Risk-o-meter of Scheme
Quantum Long Term Equity Value Fund

An Open Ended Equity Scheme following a Value Investment Strategy
• Long term capital appreciation

• Invests primarily in equity and equity related securities of companies in S&P BSE 200 index.
Quantum Long Term Equity Value Fund
Investors understand that their principal will be at Moderate Risk

* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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