Brexit: Investors expect rise of EU financial centres

Dublin and Paris will emerge as two of the biggest Brexit winners while London’s role reduces, according to many of the nearly 1,500 investment professionals surveyed, 143 of them based in Britain.

Britain’s investment professionals were “particularly worried about the effects of Brexit”, the CFA Institute said today after publishing a survey carried out in February.

Nearly three quarters of respondents from continental EU countries expected firms in their market to reduce their UK presence, while respondents “overwhelmingly” identified London as the biggest Brexit ‘loser’ – and Frankfurt, Dublin, New York and Paris as the biggest ‘winners’.

Seventy per cent said that Brexit had caused the competitiveness of the UK market to deteriorate.

Many believed Brexit would spark further exits from the EU and the proportion of respondents who thought EU “wholesale disintegration” was likely had risen from 21% in a previous survey just after the Brexit vote, to 36%.

Overall, the survey identified geo-political risks as the key factor for investment returns, with President Donald Trump’s election considered as the risk with the most impact on investment strategy, and a significant number citing the French election.

Paul Smith, CFA Institute president and chief executive of CFA Institute, said: “The current state of political uncertainty ahead of Article 50 being triggered is having a clear impact on investment professionals’ market expectations.

“That said, it is important to remember that geopolitical risk is by no means new: apart from the 20 years following 1989 and the fall of the Berlin Wall, geopolitical risk has in fact been a constant feature of financial markets. It is also only one of many challenges and potential drivers of change in the investment industry.”

Despite the vast majority of respondents (70%) expecting investment returns to be compromised by geopolitical uncertainties over the next three to five years 71% of portfolio managers said they had not changed their strategy as a result of the Brexit vote.

©2017 funds europe

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