Good afternoon!
It's a very slow day for company news today.
Brexit seems to be very much dominating things right now. The opinion polls are showing a late surge for the Out campaign. I've always assumed that the British people are most likely to do what always happens on big issues - if unsure, at the last minute people trot out and vote for the status quo (e.g. AV referendum, Scottish Independence, etc.).
For that reason, personally I've done very little to my portfolio, other than placing a bet on an Out vote succeeding, as a hedge, and also for fun. It's beginning to dawn on me that the amount I might win on that bet would be only a fraction of what might be needed to hedge fully against an Out vote.
My feeling is that an Out vote succeeding would be likely to trigger quite a big, panic spike down in UK listed company shares. I say spike down, because I suspect such a panic fall would be fairly short-lived. It's likely to dawn on investors that actually nothing much will change for a while. It's going to take many years to unpick all our arrangements with the EU, and nobody really knows what the end results will be.
Looking at it from a high level though, it's pretty obvious that trade will continue largely as normal. There might be some trade tariffs in both directions, but as a large net importer, that's actually a boost for the UK economy overall. Remember that UK tariffs on EU goods will help import substitution, so UK producers will become more competitive in their home market.
I imported some goods from Hong Kong last year, and the import tariff was small, and no impediment to my purchase decision whatsoever - either financially or administratively. The freight forwarder just emailed me an invoice, I paid it, and the goods were delivered. Easy peasy. Free trade & globalisation really isn't the panacea that some people seem to think - look at all the manufacturing jobs we've lost. So I don't think we should fear the imposition of tariffs by the EU against Britain. We should enthusiastically reciprocate, and you can bet that German manufacturers will soon be hammering down the doors of the EU to get those tariffs reversed.
Whilst personally I favour an Out vote, as the best thing for our country long term, I'm not under any illusions…
