This is just one of the reasons sterling’s sensitivity to Brexit-related discussions means “the UK stock market could be one of the better performing markets,” argued Potter.
“What people forget is when you are investing in the UK stock market, you are not necessarily investing in the UK economy, though, as you go down the market cap spectrum, your domesticity exposure increases. There is no denying that assets in the UK like property and corporates have become meaningfully cheaper to overseas predators.”
“Weak sterling means we are more competitive. It’s not a one-way bet or game. People have to think about all of the implications as a result of these moves.”
Until clarity on the subject of Brexit is reached, UK investors need to think about their entry points, he cautioned.
“If you are buying US assets now instead of last week, you are paying more in sterling for the privilege of buying the same dollar asset.
“That’s why investors need to think of the action point and exchange rate as much as they do the money. A 2% move in sterling against the dollar is quite meaningful in terms of an annualised return profile.”
