|Published : 13 Oct 2016, 22:09:36|
Global investors wary of UK markets as Brexit fog thickens
LONDON, Oct 13 (Reuters): Money managers charged with investing trillions of dollars of global savings haven't abandoned Britain just yet, but the uncertainty created by Brexit has made them extremely wary about investing in UK Plc.
Portfolio managers, strategists and investment officers at 13 asset or wealth management firms controlling more than $7 trillion of assets have told Reuters that their broadly negative view on Britain hasn't changed since the June 23 referendum that paved the way for its exit from the European Union.
Many of these money managers currently hold UK stocks and bonds and have no fixed plan to cut and run yet. Some say they will consider adding to their holdings once the Brexit fog of uncertainty lifts. But right now, most say the situation is very fluid, they are nervous about developments and are ready to review holdings at any stage.
"We are losing visibility on the UK," said Eric Brard, head of fixed income and debt asset management at Amundi, a global asset manager with more than $1.1 trillion worth of assets under management.
For a country that relies on overseas investors to balance its books by funding its current account deficit - "the kindness of strangers", in the words of Bank of England governor Mark Carney - even the hint that capital inflows might dry up could have serious consequences.
With one of the biggest balance of payments deficits in the developed world of around 6 percent of annual economic output, Britain needs that capital to keep coming in. If it's not forthcoming, sterling's value - the shop window price for all UK assets to the rest of the world - must drop far enough to make it attractive enough to return.