When I heard the results of the Brexit vote last Friday, I was watching TV, clutching a cup of coffee and snuggling under a blanket with my sons in the diamond city, Kimberley.
As soon as the news bulletin ended, my phone started to buzz uncontrollably.
First, a message from my brother asking, “Did you see the Brexit result?” I ignored it. Then, a message from a colleague, “How could this have happened? Did you see the Brexit result?” Again, I ignored it.
Then, the questions came:
• “What are we going to do now that Britain has left the European Union?”
• “What does this mean for South Africa?”
• “Can our economy handle this knock?”
I put down my cup of coffee and set one message to everyone in my contact list...
Stop panicking about Brexit – There’s nothing you need to do right now
The financial market is like a soap opera. It loves drama. But as an investor, you need to be careful about getting too involved in the drama.
You need to understand that there’s nothing you can do to change the result of the Brexit vote, so don’t panic about something beyond your control.
I warned you that dual listed shares were going to take a knock. I encouraged you to look at your investment portfolio more closely. I also warned you that the immediate impact of the Brexit vote will hit the markets hard and fast.
This is exactly what happened on Friday:
· Anglo American fell 8.01% to R135.72
· Glencore dropped 11.31% to R28.93
· Sasol plunged 2.47% to R396.47
· ArcelorMittal slid 13.68% to R7.38
· Richemont dipped 3.34%
But you knew this was coming. There’s no surprise in the results.
Remember, these are massive companies with exceptional business models. I believe that the chances of them crashing because of Brexit, is slim.
What does Brexit mean for South Africa?
There’s no way to sugar coat this, the answer is simple. The impact will be severe.
South Africa is the UK’s largest trading partner in Africa. The UK on the other hand is South Africa’s seventh largest import and export market in global terms. The negative economic results in London will put a damper on the levels of trade between South Africa and the UK.
South Africa also needs to consider what will happen if trade agreements between the UK, the European Union and South Africa are cancelled.
Our economy can’t afford to take another knock like this. This increases the chance of us diving into a recession. But, again, we’re waiting for this to happen anyway.
What should you be doing with your investments afrter Brexit?
Let me say this again, “DON’T PANIC”. The sun came up again this morning, the world is still rotating on its axis, it’s still winter in South Africa and I am still waiting for spring to arrive.
The point is, life goes on. All you need to do is make small adjustments to the way you invest. We can help you do that.
flagship investment publication, The South African Investor
, operates on the principles of Protection, Profits and Privilege. That means that every issue is committed to help you protect
your investments and find profit opportunities
(in any market) by delivering you privileged information
usually reserved for investment insiders.
So if you want to find out how to handle the shaky investment environment, I would strongly suggest you take a look at this publication to limit the impact of Brexit on your portfolio and find the best profit opportunities out there right now.