For the last four and a half years we’ve followed the theatre of a country preparing to bid farewell to a trade bloc. Political villains stealing the show, Parliamentary battle scenes and, in a dramatic climax, an 11th hour agreement to seal the terms of the UK’s departure. Throw in a pandemic to the final scenes and you’ve a hit stage show neither Rodgers nor Hammerstein could have dreamed of.
The B word held a firm grip on news headlines and water cooler chit-chat since the result of the referendum came in on the morning of 24th June 2016. That is until, of course, something far more significant stole the show in the Spring of 2020.
The Leave vote, inevitably, brought with it questions about the UK stock market. But despite the initial shock (the FTSE 100, a measure of the UK’s largest 100 companies, fell nearly 6% in the days following the result) the UK stock market has bounced back to quietly grow backstage.
Charting the performance of the FTSE All Share (similar to the FTSE 100 but includes all of the UK’s listed companies) against the major plot twists of the Brexit show, it seems the audience took little notice. Against a backdrop of political chaos, £100,000 invested at the start of 2016 would be worth around £128,000 by the time the UK officially left the EU at the end of 2020.
When it comes to the stock market, at any one time there are an unlimited number of internal and external factors influencing a company’s share price. Brexit is just one of those external factors. Many “UK” companies also earn profits globally, such as HSBC and Shell. It's impossible to predict where the UK stock market will go from here, but as an investor it’s helpful to keep Brexit in perspective while ensuring your portfolio is diversified globally.
So, although headlines and media frenzy may upstage the FTSE, as far as the stock market is concerned the show must, indeed, go on.
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Liam Kerr is Planner at Carbon and can be contacted by email or by phone: 07841 488 118.
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