February 25, 2021

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Buy British: Great Britain attracts investors again | Markets | 02/18/2021

Uncertainty over when and under what circumstances the UK will leave the EU has plunged investors into a real buyers’ strike since the 2016 referendum. The outcome of the uncertainty is now offset by the negative Brexit effects, the doctor believes. Adolf Rosenstock from Mainsky Property Management.

Dr. Adolf Rosenstock is an economic adviser and chairman of the Mainsky Oversight Board.

© Mainsky Property Management

The risk of a non-contract Brexit weighed heavily on UK stocks in international portfolios. Investors felt confirmed by the recent outbreak of the corona epidemic, which led to a very high incidence in the United Kingdom and was preceded by a higher number of deaths than in many other countries. But now the tide has changed in many respects and British financial assets are relatively cheap and have good performance potential.

What are the benefits of “British Buy”?
The agreement between the UK and the EU, negotiated at the last minute, regulates mutual market access to goods. Now again there are customs restrictions and countless free import restrictions. None of those important services have yet been acknowledged. New bilateral agreements regulating financial services in particular are likely to be here. Overall, this will weaken the UK economy more than the EU economy.

Uncertainty is out
Despite all the negative consequences, the uncertainties of how and when to exit the market with the Brexit deal are gone and the fact that it is now in the hands of Great Britain will be very decisive for the foreseeable future. The British financial market wants to trade with countries outside the EU under any circumstances. In the long run, Brexit will lead to stronger relationships with global trading partners such as China, India or the United States.

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Better vaccine management
In addition, the British government has been better able to manage the corona crisis than the EU since vaccines were approved. He not only negotiated legally superior deals with pharmaceutical companies, but also initially ordered individual vaccine doses. So far, a quarter of the UK population has been vaccinated at least once, while the EU has not reached even five per cent. So the Great Britain herd must achieve immunity very fast and thus return to more or less normal economic, social and cultural life than many countries.

Favorable stock rating
“This is one of the reasons why we expect Great Britain to experience strong cyclical growth in the coming months – so there are months ahead of the EU. Benefit from the list of mining companies, ”says Dr. Adolf Rosenstock from Mainsky Property Management. Despite this recent recovery, the UK stock market is still moderately valuable. Currently with 13.5 forward PE, it is relatively cheap compared to 15.7 with Germany or 22.4 with USA.

British bonds needed again
In addition, with the external value of the pound and rising yields, the British bond market is now back in the view of investors, so Rosenstock continues. “Overall, Brexit is a clear cut in trade relations between Great Britain and the EU, which will be an integral part of future investment decisions. There was uncertainty before. ” (kb)