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Brexit: The Boxers are in the Ring - 7IM Market Commentary

Posted Wednesday, 06 April 2016, 4.44pm

Understandably, Brexit is a concern for many; especially where investments are concerned. Seven Investment Management (7IM) bring to us their comments in this market commentary from one of their Investment Managers, Ben Kumar.

"The boxers are in the ring and the bell for the first round has sounded. As so often in the lead-up to the contest, we’ve seen two very different approaches – with one side grabbing the spotlight and the headlines, whilst the other has kept their cards close to their chest.

Now though, following the deal reached by David Cameron in Brussels last week, both the ’In’ and ‘Out’ sides can begin campaigning ahead of the referendum on the 23 June.

If you haven’t already prepared yourself, get ready for referendum fatigue over the next four months. Dry editorials, learned opinions and celebrity endorsements, combined with a barrage of polls are going to be tough to avoid. At the risk of adding to the noise, we’ve laid out our initial thoughts below.

The deal

There was never going to be a membership deal good enough to make a referendum pointless. The fine print of the UK’s relationship with the EU was not what brought this referendum about in the first place; the referendum reflects a growing popular viewpoint largely focussed on immigration issues – as can be seen in the rise of the UKIP party over the past decade or so. For most Eurosceptics, leaving the EU is the only palatable option.

The main outcome of the deal is that the ‘In’ campaign will finally begin to muster their argument. The likely approach will be to point to the overall deal as indicative of the EU recognising that the UK has special status, rather than emphasising the minutiae. Potentially undecided voters are unlikely to care too much about the details, but may be receptive to a message that the UK’s relationship with the EU is responsive to UK input...."

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Ben Kumar, Seven Investment Management (7IM) Investment Manager

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