Brexit does not change the global growth outlook

The market reaction to the news Britain has voted to leave the European Union has been strong –not unsurprisingly given markets expected the vote to swing the other way.

While Brexit will intensify pre-existing concerns regarding soft global growth, China’s transition to a more domestically driven economy and fears about a steady lift in US inflation, it does not significantly change ANZ Wealth’s assessment of the global economic outlook.

" ...the actual exit process of Britain from the EU, may take years, not months, to play out."
Mark Rider, Head of Investment Strategy & Portfolio Management, ANZ Wealth CIO

That said, the impact is clearly negative in the short term while longer-term implications are highly uncertain and very much depend on any further EU member states moving to leave. This, along with the actual exit process of Britain from the EU, may take years, not months, to play out.

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Ex-UK PM David Cameron backed the wrong horse in the Brexit vote.

ANZ Wealth’s Chief Investment Office expects the fallout from the vote will keep monetary policy easy for longer across the developed economies. This will likely provide some support for share markets but we continue to remain cautious towards such risk assets given the still modest pace of global growth.

The Brexit vote and its implications support ANZ wealth’s own cautious investment strategy to growth assets but does not change it.

Opportunities may emerge to invest more defensively if growth assets continue to weaken in the weeks ahead. However, we are not at that point yet and remain cautious towards growth assets as markets continue to digest the implications of the Brexit.

Mark Rider is Head of Investment Strategy and Portfolio Management at ANZ Wealth’s Chief Investment Office

You can read the full version of this story on anzwealthinsights

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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