
Brexit uncertainty means UK is uninvestable - pjc50
http://uk.businessinsider.com/brexit-uncertainty-means-uk-is-univestable-bernstein-says-2018-11
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esotericn
It's a strong claim to state that increased variance causes "uninvestability".

It _might_ be fair to say that what is instead occuring is that the market
hasn't revalued appropriately.

Not enough upside / "safety margin" to account for the increased risk.

Equally though it could be said that this is a statement about the market's
opinion of the actual risk involved - e.g. it's all going to actually be fine.

Whilst it's still impossible to buy real estate in London for less than 10x
the median salary I find claims that "the UK is uninvestable" extremely
suspect. Where are all the sellers?

~~~
verbify
The number of homes for sale has dropped to a decade low (lowest since the
2008 financial crisis). And property prices in London have dropped.

The uncertainty around Brexit means that people don't want to buy, nor do they
want to sell at a loss until they're sure that they have to count it as a
loss. There's a lack of liquidity.

[https://www.theguardian.com/business/2018/oct/05/uk-house-
pr...](https://www.theguardian.com/business/2018/oct/05/uk-house-prices-fell-
sharply-in-september-amid-brexit-wariness)

Edit:

As I point out in a comment below, if you're a foreign investor investing the
day before the referendum, the exchange rate along means you lost 14% of your
investment so far.

~~~
esotericn
> nor do they want to sell at a loss until they're sure that they have to
> count it as a loss.

I mentioned this as a possibility in my comment. Prices have not been adjusted
because people don't actually believe, on the whole, that Brexit means
anything material.

> And property prices in London have dropped.

By a low single digit percentage, last year, primarily at the top end of the
market.

If you're trading on leveraged derivatives that might be relevant. There are
approximately zero actual individuals affected by a change of that magnitude.

As I said, when we see real hard and fast falls, then I'll be interested.
Right now it's just bluster on all sides. All talk, no action.

I ask - politely - if you're going to reply with a nitpick, and state that
actually it's 2%, or 3%, not 1%, or something - consider what this actually
means. Brexit is being spoken about everywhere as some sort of hugely
important world-breaking apocalyptic event, not a very slight adjustment over
decades.

The single largest contributor to quality of life for every single person I
know is quality and availability of housing.

Everything else is linked to that - we don't need food banks because people
can't afford food, we need food banks because all the money disappeared into a
rent hole first.

~~~
tim333
>Prices have not been adjusted because people don't actually believe, on the
whole, that Brexit means anything material

I'm a London property owner who's pondered selling. Brexit will probably make
a big difference but who knows how it's going to go just now. I'm going to sit
it out and see but there could be a big fall with a no deal brexit. That said
we survived WW1 and 2 so we'll survive a trade hiccup.

~~~
verbify
> we survived WW1 and 2 so we'll survive a trade hiccup.

I don't understand this reasoning. We didn't all survive WW1 and 2. If you
mean the union survived - the Republic of Ireland left the union shortly after
WW1. And if Brexit isn't _as bad_ as the Blitz, surely that could still mean
it's pretty awful.

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raverbashing
But JRM and other cronies are going to make a ton of money so of course they
don't give a f [https://www.thelondoneconomic.com/news/jacob-rees-mogg-
line-...](https://www.thelondoneconomic.com/news/jacob-rees-mogg-line-huge-
personal-windfall-britain-exits-single-market/07/02/)

------
krona
Direct inward foreign investment experienced a large anomalous and record
breaking peak in 2016, the year Brexit was essentially announced. The total
size of this investment was almost half the FDI of the EU for that year. [1]

Provisional quarterly estimates suggest that the downward trend in net FDI
earnings ended in 2017, recording the first annual increase since 2011. [2]

1:
[https://unctad.org/en/PublicationsLibrary/wir2018_en.pdf](https://unctad.org/en/PublicationsLibrary/wir2018_en.pdf)
(Annex, table 1) 2:
[https://www.ons.gov.uk/economy/nationalaccounts/balanceofpay...](https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/articles/ukforeigndirectinvestmenttrendsandanalysis/july2018)

------
TazeTSchnitzel
It's not just _uncertain_. The prospect of no-deal means an economic
apocalypse in just over 4 months' time is a serious possibility.

~~~
jp555
No deal would be a _huge_ buying opportunity.

Even in the worst case scenario, the UK is almost certainly not going to
collapse. I mean it’s survived _way_ worse times.

It might take a beating, but it’ll figure it out.

~~~
AndrewOMartin
Bring on the good "almost certainly not going to collapse" times.

~~~
hacknat
“When there’s blood in the streets, buy property.”

~~~
justincormack
UK property prices rarely fall much the market just becomes illiquid for long
periods.

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rapsey
Uncertanty is the time for the best buying opportunities.

~~~
ChrisSD
Sure, you can take a gamble and win. But you can also lose big. History shows
that, lacking a crystal ball, you're more likely to lose than win.

So there's an opportunity for some investors to win big but most of them will
lose. And even the ones that win will likely lose out on their next gamble.
Such is the way of unstable markets.

~~~
ashelmire
> History shows that, lacking a crystal ball, you're more likely to lose than
> win.

This is the opposite of what history shows. Markets have grown on average. Buy
a varied assortment of assets, an index of British assets, you’ll do fine.
Just don’t expect good quarters in the short term. You’ll be up a lot in 10 or
20 years.

~~~
ChrisSD
Yes if you average over the market you're likely to make money in the long
term. Though note that in some cases long term can be on the order of two or
more decades.

Buying into a risky market right before a down turn will only increase the
time for you to see a return on your investment. Meanwhile you could have been
making a "steady" income in less uncertain markets. Or even invested in the
world market as a whole.

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matt4077
I remember well the discussions, here and elsewhere, from around the time of
the referendum.

Next time I need some happy distraction I might just look up all the pro-
Brexit commentators and rub it in there face how entirely spot-on the dire
predictions back then actually where.

Too bad they are far too likely to be scavenging for food to indulge my
gloating :(

~~~
r00fus
More likely the "lead Brexiters" make a lot on the period high volatility.

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sys_64738
The markets hate uncertainty so the whole UK economy is wobbling on the edge
of a cliff. The tory PM can't even be guaranteed to get the EU deal she is
currently championing through Parliament as the backbenchers are revolting.

Only Labor can save Britain from collapse.

~~~
repolfx
Reality check: in the big 4 western European economies (UK, France, Germany,
Italy) the UK grew the most in Q3:

[https://order-order.com/2018/11/14/uk-top-big-four-eu-
growth...](https://order-order.com/2018/11/14/uk-top-big-four-eu-growth-
league/)

Italy was stagnant and Germany actually shrank!

EU supporters have been peddling this "UK is on the brink of total collapse"
story for the last two years and yet the economy has continued to be one of
the top performers in all of Europe.

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amriksohata
What a load of rubbish, Google and Amazon just announced in the past few
months they are investing, they all know Brexit or no Brexit the UK is a
highly desirable place for business.

~~~
JumpCrisscross
> _Google and Amazon just announced in the past few months they are investing
> [in the UK]_

Source?

~~~
amriksohata
[https://www.independent.co.uk/news/business/news/uk-tech-
sec...](https://www.independent.co.uk/news/business/news/uk-tech-sector-
brexit-2017-investment-record-leave-eu-london-startups-a8143021.html)

------
candiodari
Which ironically means that the GBP will probably go UP when a hard Brexit
happens.

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logifail
>> lack of political clarity makes it very difficult to determine asset price
movements

Q: Would "political clarity" _determine_ asset price movements?

~~~
Arnt
Asset prices are composed of many things. Political clarity reduces one
component, namely one kind of uncertainty. Uncertainty makes the computed
asset price more uncertain. If a given asset is expected to have a value of
£1m±10% in a year, reducing uncertainty makes the expected value £1m±5%.

Uncertaintly doesn't affect the headline number directly, but it does affect
the ± part of the price price and complicate planning, and the reduced ability
to plan may indirectly affect the headline number.

~~~
logifail
The OP wasn't talking about asset prices, but asset price _movements_.

That's awfully close to suggesting that one could predict the future price of
assets, if only it wasn't for this pesky "political instability".

Surely not?

~~~
Arnt
Asset price movements are basically x-y, where x and y are asset prices at two
different times. If the uncertainty of x and y grows, then that of x-y grows
even more.

