Brexit: Fund managers look to sell UK holdings if exit appears likely

Financial services stands out as the sector at greatest risk if the UK were to leave the EU following next month’s referendum, according to research from the IR Society and IR consultant QuantiFire.

The study looks at the opinions of fund managers and buy-side analysts regarding the likely impact a ‘leave’ vote on June 23 would have on investment markets.

Sixty-four percent of respondents say they will reduce or sell UK equities if Brexit looks likely while 54 percent would reduce their exposure to UK debt securities, finds the study of 407 responses from 361 institutions – including 11 of the top 20 global investors by assets under management.

There are some regional differences, though. ‘UK and European investors expect to reduce their exposure to UK securities more aggressively than to EU securities, [but] UK investors remain slightly more positive on their domestic market than their European counterparts,’ states a press release from the IR Society. ‘North American investors expect to reduce their exposure to both UK and EU markets equally, in the event that Brexit looks likely.’

Almost nine out of 10 respondents (88 percent) believe Brexit would have a negative impact on UK investment markets in the short term, while 78 percent say the potential for the UK to leave the EU is now ‘an important factor when making investment decisions.’

Although financial services and real estate investments are deemed to be most at risk if voters decide to leave the union, the impact wouldn’t necessarily be negative overall: 44 percent of respondents say there will be some winners in the UK economy, with exporters and industrials most preferred.

A further 30 percent say that over the medium to long term, the effect of Brexit on UK securities would be neutral to positive.