Ultimately, if Britain votes to stay in the EU, it will be Business As Usual for the economy and the Stock Markets, with a notable positive swing. The Brexit debate a very strong influencer in the last few months and has caused investors to be wary of investing – Hence the market having no trend the last few months.
Below are my thoughts about what will be impacted and how!
If Britain do leave the EU, it will be the Small and Mid Sized Stocks will take the hit (under £100mil market cap), and the FTSE 100 companies will be less impacted.
Let me explain:
Smaller companies tend to be focused domestically rather than internationally due to the increased costs and complications associated with moving products/services abroad, it means when they do try move internationally, there will be increased costs and complications of this, ultimately putting them off doing so. This dilemma has caused (in most cases) a drop in the Stock Price of the majority this year as investors pull out of companies that will lack growth moving forward.
It will also impact sectors.
Auto manufacturers, agricultural sectors, clothing and fashion sectors will be impacted as increases in taxes, levy’s and a decrease in EU funding will impact the bottom line and slash profit.
I know this is grim reading, but dont panic, there is always smart choices in austerity. Let me flip the coin:
- the small to medium cap companies have already decreased in value due to the air of uncertainty. Theres bargains out there. Some companies have a cheap price on the stock exchange, so find one you like (if you need help with where to look, click here on my previous post which will assist I hope) and watch it fluctuate during the weeks before, and pick it up at a steal.
- On the plus side, FTSE 100 companies won’t be impacted as much as you think. Aim your search with them. Around 70% of the revenue for the FTSE 100 comes from overseas, so ultimately it is not a measure of the UK economy, its a measure of the global economy.
I hope this has helped you understand your options with Brexit approaching fast