Brexit will give many investing opportunities in 2018

Whatever Brexit brings, lots of investors will welcome the opportunity to snap up shares – if the price is right

James Connington, Telegraph personal finance reporter

James Connington is a personal finance reporter at The Telegraph

Investors in British shares were well rewarded in 2017, thanks to a 7 per cent rise in the FTSE 100 index of leading shares (at the time of writing). Growth in all the major regions of the global economy has been strong, fears of damaging deflation have receded and the British economy has so far confounded expectations of weakness brought about by Brexit.

These developments reflect a sense that the seemingly permanent crisis that economies around the globe have endured since the crash of 2008-09 is at last beginning to recede.

Investors have assets sitting in cash awaiting the opportunity to buy bargains

However, in the financial markets a feeling of unease is common. Following very strong gains since the worst of the crisis, many stock markets no longer look undervalued, and investors talk of an imminent crash. Some have taken to hoarding cash.

It is true that some measures of stock-market value look worrying. Many company share prices are high relative to their profits. But this should prove temporary: a significant improvement in the earnings of many FTSE 100 members, driven by the recent recovery in oil and commodity prices, is expected to push valuations back into more normal territory next year.

The Brexit negotiations remain a huge source of uncertainty. No agreement as yet has been signed between Britain and the EU, but by the end of 2018 we should know the shape of the future trading relationship.

As the specifics of the arrangements are decided, we can expect individual sectors and companies to be affected in various ways – some positively, others less so. But the effect of the eventual deal on the value of the pound is likely to be felt across the board.

When markets had recovered from their initial shock at the result of the EU referendum, the FTSE 100 rose sharply. This was because the fall in the value of the pound boosted the value of companies’ overseas earnings in sterling terms – and around 70 per cent of the FTSE 100’s income is derived from abroad. If the Brexit deal – or the lack of one – were to send the pound lower, the share prices of these firms could be expected to rise further.

It would be a different story for domestically focused businesses that import raw materials from abroad. A weak pound would increase costs, while the likely rise in inflation caused by a decline in sterling would give consumers less money to spend. These firms’ share prices could be expected to suffer.

Whether or not their worries centre around valuations or Brexit, many investors – both private and professional – are waiting for a correction and have significant proportions of their assets sitting in cash awaiting the opportunity to buy bargains.

Whatever Brexit brings, the London stock market is home to many fine businesses – and there are plenty of investors who would love to snap up their shares if they were more attractively priced. Perhaps, at some stage during 2018, they will be.

Fresh perspectives on 2018

A lot happened in 2017 – but what lessons can we take from it into 2018?

The Telegraph and Invesco have teamed up to share predictions for the New Year, written by our respected journalists and expert commentators.

Find out the 2018 forecasts for money, politics, style, sport, science, travel, lifestyle, food, drink and culture at

Deixe um comentário

Faça o login usando um destes métodos para comentar:

Logo do

Você está comentando utilizando sua conta Sair /  Alterar )

Imagem do Twitter

Você está comentando utilizando sua conta Twitter. Sair /  Alterar )

Foto do Facebook

Você está comentando utilizando sua conta Facebook. Sair /  Alterar )

Conectando a %s

Este site utiliza o Akismet para reduzir spam. Saiba como seus dados em comentários são processados.

%d blogueiros gostam disto: