Investors Confront Market Uncertainty in Face of EU Referendum

May 23, 2016, 02:05 ET from The Investor Relations Society

LONDON, May 23, 2016 /PRNewswire/ --

Two thirds of institutional investors say they will sell UK equities in the event of Brexit

A majority of UK and international investors believe that there will be a negative impact on investment markets if the UK votes to leave the EU, according to research undertaken by the Investor Relations Society (IR Society) in partnership with QuantiFire. Results are consistent across all geographies from investors who invest in companies of all sizes and across all sectors.

The research was designed to examine the opinions of fund managers and buy-side analysts regarding the likely impact that a Brexit would have on investment markets. In total 407 responses were obtained from 361 institutions, including 11 of the top 20 global investors by assets under management. Key findings include:

  • 78% of investors say that the potential for Brexit is now an important factor when making investment decisions;
  • 88% think that a Brexit would have a negative impact on UK investment markets in the short term (<1 year);
  • 64% will reduce or sell UK equities and 54% will reduce their exposure to UK debt securities, if Brexit looks likely;
  • Financial services and real estate investments are expected to be the main losers if Brexit occurs;
  • 44% believe that there will also be winners in the UK economy, with exporters and industrials most preferred;
  • 30% of investors are contrarian, believing that the effect of Brexit would be neutral to positive for UK securities over the medium to long term.

Whilst investors expect both debt and equity markets in the UK and across Europe to be impacted if the UK leaves the EU, Financial Services stands out as the sector perceived to be at greatest risk. However, market uncertainty around the Brexit issue is also a key theme in investors' comments.

Several commentators also state that the main reaction to the UK leaving the EU could be through the currency markets, with a likely fall in the value of sterling supporting the view that UK exporters would be the most likely beneficiaries.

The findings also show that whilst UK and European investors expect to reduce their exposure to UK securities more aggressively than EU securities, UK investors remain slightly more positive on their domestic market than their European counterparts. North American investors expect to reduce their exposure to both UK and EU markets equally, in the event that a Brexit looks likely.

John Gollifer, General Manager of the IR Society commented, "Investor relations is fundamentally about creating a dialogue between companies and the investment community. This timely piece of research tells us that two thirds of fund managers have suggested they will be reducing or selling UK equities if Brexit looks likely. At the IR Society, we have an important role in helping our members prepare for this possibility."

Commenting on this research, Charles Hamlyn, Managing Director of QuantiFire said: "The results of our research clearly indicate that risk appetite among institutional investors is very likely to fall if Vote Leave gains ground in the run up to the referendum. Whilst there are conflicting arguments surrounding Brexit, these results underline the fact that uncertainty is never good news for capital markets".

A full copy of the research report will be made available shortly. To register to receive a copy of the final report please contact laura.hayter@irs.org.uk

Notes for editors: 

The Investor Relations Society 

The Investor Relations Society (IR Society) is a membership organisation that exists to promote best practice investor relations in the UK and beyond. It is run by IR professionals for IR professionals. Established in 1980, the IR Society's mission is to promote best practice in investor relations; to support the professional development of its members; to represent their views to regulatory bodies, the investment community and government; and to act as a forum for issuers and the investment community.

The Society has over 750 members from the UK, Europe and beyond, including representatives from most of the FTSE 100, a large number of FTSE 250 companies and a number of AIM and smaller companies as well as IR advisers and service providers. For more information visit http://www.irs.org.uk or connect with us on Twitter (@IRSocietyUK) or LinkedIn

QuantiFire 

QuantiFire is a specialist provider of capital markets perception research and associated investor relations services.

Our experienced team of IR practitioners use advanced technologies to capture and analyse investor perception as data. The essential insight that we provide supports critical objectives, including investor targeting, roadshow planning, messaging, board reporting and more.  

With offices in London, Madrid and Milan, QuantiFire is improving efficiency and reducing the cost of IR for many global, FTSE 100 and small cap companies.

For further information contact:

The Investor Relations Society
John Gollifer - General Manager: +44-(0)20-7379-1763
Laura Hayter - Head of Policy and Communications: +44-(0)20-7379-1763

QuantiFire
Charles Hamlyn - Managing Director: +44-(0)20-7060-5470

SOURCE The Investor Relations Society