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Equity trading opportunities - pre and post Brexit Referendum


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With about 2 months to go to the referendum, I am hoping to create a discussion on expected moves in individual stocks in the run up to the referendum and post the result. I have posted this in the 'fundamental' forum as I am not coming at it from a charting perspective but I am also very keen to get any technical views as well.

 

My view is that there is likely to be some significant volatility in the run up to the ref and probably a big 'risk off' move (particulalry in the context of the FTSE having had a pretty good run since mid Feb anyway).  To kick the debate off with a few general comments, from a perspective of UK listed equities, I would expect:

- high likelihood of downward moves in:

  • companies with UK as a significant end market (consumer stocks such as retailers, in particular discretionary retailers, housebuilders, possibly insurers), 
  • financials, in particular banks

- less affected by downside as a result of the referendum unceratainty & result (though not necessarily meaning bullish) in:

  • companies with predominantly non-UK or even better non-EU end markets (tobacco, food & bev such as Diageo, ARM, pharma Glaxo, Astrazeneca, even resources BHP, RIO)

- cant think of the referenum driving any particulalry bullish moves unless polls start showing a siginifcant swing towards a 'remain' vote

 

My comments above are obviously on UK listed equities which is where I concentrate but I am keen to get views on non-UK listed equities as well.

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  • 3 weeks later...

HI  

 

Sorry for the radio silence on your post but there has been quite a lot going on in the markets near term.  I was prompted to seek out your post when I read the attached article this morning on the BBC:

 

http://www.bbc.co.uk/news/business-36150191

 

You gotta love this stuff.  First the Treasury, no doubt prompted by the government (most politicians want to stay in because it gives them a bigger pond to ***** in) puts out a report telling us we will get a 6% shrinkage in the economy if the UK leaves the EU and now a group of economists with the leave campaign say the exact opposite.

 

Conclusion, none of them know what they are talking about and you can make any model work...  In short don't trust economists, almost all of them got the Credit Crunch thing wrong and they are getting the current situation badly wrong too and real people will be the ones who suffer (see  cartoon post for illustration!)

 

As it happens I tend to agree with the leave campaign economists for the following reasons:

  1. Why would trade suffer on exit?  Britain has been a trading nation for centuries, that won't change.  It is also a big market at a time when growth is hard to come by, do you see anyone cutting off their companies to the UK market just because it is no longer part of the EU?  I don't!
  2. Trade deals aren't needed but if they are they will happen quite quickly for the above reasons
  3. The City will be stronger rather than weaker outside the EU - think of London as an offshore location without any EU interference but with massive history, resource and infrastructure geared toward FS - leave London?  Only maybe because of tax but not because of Brexit (and by the way a number of serious money men are funding the leave campaign...)

Coming to your specific questions/comments  I can't really help because I don't trade individual companies, rather the indices.  I do invest in individual companies but I'm totally in cash just now and not because of Brexit, which is a red herring for investment and trading I feel.  I don't agree with the premise of your position.  I don't see much if any fallout for individual companies as a result of Brexit.  This is a political rather than economic issue, which actually is at the heart of the matter because the EU started as the EEC, an economic entity, and now some want it to be the united states of Europe, which is where the wheels have come off.

 

By June 18 I expect the global markets to be in, or approaching free fall.  There is no growth to grow out of the massive debt spiral (pun intended) we are in.  Central Bankers have nothing left in the locker, NIRP is death, more QE is death, too much M&A is death, profits warnings are death.  Where does Brexit factor in all of this?  A flea on a dogs behind, that's all.

 

My main message is, don't get distracted by all this Brexit nonsense and focus on the basics of trading strategy.

 

I'm sure there are plenty who will disagree, let's hope so...

 

 

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  • 2 weeks later...

Just for laughs while waiting for US opening, did anyone see George Osborne banging on about 300,000 job losses in the City and a house price slump if the UK leaves the EU?  Given that the man on the top deck of the Clapham Omnibus hates the City and still blames them (and the Central Bankers and politicians if he has any wit) for the credit crunch and recession AND the majority of people cannot afford a house or their kids can't I'd have thought that was all a case for leave not remain!

 

Oh he countered the house price argument by saying the cost of getting a mortgage would soar thus people still wouldn't be able to buy.  So is he really saying that the BoE will put up rates on Brexit?  And how would that play in the global currency wars?

 

Answers on a postcard please.  I have to say the more I hear these politicians trotting out scaremonger "facts" the more I want to vote leave, you can bet it is self interest that is motivating them...  I mean what else would get Cameron, Osborne, Brown, Sturgeon, Obama, Merkel and Corbyn on the same side of anything.  You gotta love Brown calling on the Churchillian spirit though...!  Wonder what Merkel thinks of that? 

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Is it scaremongering?  One of the reasons that the Swiss banks set up UK bank subsidiaries was because Switzerland doesn't have access to the financial passport system (it not being in the EU or in the EEA).  Gove confirmed at the weekend that the UK would leave the EU and not join the EEA so we wouldn't have access to the financial passport system. So that's a slam dunk that the UK subsidiaries of the Swiss banks will close.

 

How long will the US investment banks retain the large UK presence that they have once they find that they can't sell financial products from the UK to the rest of Europe?  How many other jobs in other financial organisations?

 

300,000 jobs strikes me as perfectly reasonable number.  As an investment banker in a European bank I know myself that if we Brexit then my job will no longer exist .... at least not here in London.

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Yeah buy my point was that the man on the street would be quite happy for City types to loose their jobs and for house prices to go down not that jobs in the City would not be lost...  I would imagine that the City of London would reinvent itself as an offshore world financial centre and the game would carry on no?

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