What Brexit means for investors

coinsSo, on June 23rd 2016 Britain decided to exit the European Union (EU). This move has been called “Brexit” and when it happened it shook the world. It also seemed to happen really quickly and out of nowhere.

While we still wait for the defined outcomes of what Brexit actually means and what changes to expect, many are concerned and speculate that we could very well be faced with a negative global economic impact. some, however, think this is the belief of naysayers and that the effects could be positive in the long term.

Things went pear shaped immediately but all is not lost

The immediate effect was that stocks fell, predominantly in the U.S. and Europe. However, long term effects might be that Britain will no longer be operating with the restrictions of EU and have to pay related expenses. As an independent state, Britain can create regulations and policies that are specifically suitable to their needs. And, there are many who believe that every country should operate independently of any unions or the like.

Brexit presents opportunities too

There are many financial gurus and money managers who believed Brexit would cause a series of immediate problems for investors. However there are many who’ve contradicted this belief and are of the thought that there are now Brexit investment opportunities. Brexit supporters are keeping alert and watching the markets with a magnifying glass but they’re remaining invested. In other words, don’t run and hide with your investments just remain aware as there may be some geopolitical shocks that come about.

This is a big deal for Africa’s relationship with the UK

Africa in particular has a long-standing history with the UK. Many South Africans have roots in Britain due to previous members of their family having been born of British descent. Also, many Africans have immigrated to the UK but they still have family who live in Africa. In the early 2000s many young South Africans scrambled to get working visas so they might secure a career and future in the UK and they’re still there today. Because it was the easiest place to immigrate to. And on the political and business front, trade agreements between the UK and various African countries are strong and significant to both parties. So Brexit and all other politics or changes in various policies really matter to the African continent.

South African finance experts have weighed in on the subject matter many times after it happened

Shortly after Brexit happened, ratings agency Moody’s weighed in on the subject of investment and Brexit. They noted how South Africa is the most exposed country in Africa to experience the shockwaves from Brexit. And even though the rand and the JSE have returned to their pre-brexit levels, South Africa operates with an account deficit. This debt could leave the country vulnerable when it comes to any capital outflows.

Also, thwarted growth in the UK is likely to affect SA negatively, even if only slightly. Moody’s states, “Although we expect that SA will avoid a recession in 2016, the speed of any likely economic recovery and medium-term growth, which are already constrained by structural impediment, could be adversely affected if Brexit were to lead to increased risk aversion and reduced investor appetite towards emerging markets.”

Finance minister, Pravin Gordhan, also had some thoughts on the topic when he spoke to Bloomberg TV in London: “These things are all relative. When you have the extreme uncertainty of right wing populism and other political developments in the European context, then we actually look relatively stable and a good place to be in.” Minister Gordhan believes that Brexit assists with making South Africa an ideal investment destination. He went on to list his three top reasons why he believes this, “Firstly, because South Africa has the best business infrastructure on the African continent. Secondly, because we have many South African firms that have an excellent penetration in the African market. And, thirdly, because Africa for the next 20 years is the world’s future in terms of growth, in terms of demand, in terms of the demographic dividend.”