UK investments should be ‘more attractive to foreign investors’ following the decision to leave the EU.
Steve Monk, head of investments at Prest Financial Planning, writing in the firm’s bulletin, also says ‘longer-term economic prospects for the UK and Europe could be unaffected by Brexit’.
Steve writes: “Stock markets in the next few months will be particularly volatile as investors respond to the changing political background which will have implications for trade and regulation across national borders.
“Expectations for short-term growth in the UK and Europe have been lowered and this has seen dramatic falls in the share prices of banks and builders who are most exposed to any downturn in the UK economy.
“However, sterling has fallen and this has improved the profitability of many larger companies in the FTSE100 who earn much of their income abroad.
“The initial upshot of this has seen a rise in the level of the FTSE100 index, however the FTSE250 index which is more representative of UK businesses has fallen.
“The Bank of England has been active before and after the referendum ensuring that the banking sector is resilient and can continue financing businesses and individuals so that a repeat of the credit crisis is avoided.
“It is possible that the longer term economic prospects for the UK and Europe could be unaffected by Brexit and in some ways we may benefit.
“However, in the short term the uncertainty will produce falls in the value of shares and property but the lower value of sterling should make UK investments more attractive to foreign investors.”
Steve also believes property is still a good long-term investment despite some uncertainty.
He adds: “Foreign investment into commercial property in the UK had been at an extremely high level in the run up to the referendum.
“However, this has all but stopped and the negative sentiment has caused many investors to request withdrawals from property funds.
“As property funds hold physical buildings they have imposed restrictions on withdrawals to protect their liquidity and the interests of continuing fund holders.
“Property funds are yielding approximately 3% and continue to be a good investment to hold for the long term.”