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UBS after Brexit vote: limit exposure to UK gilts, sterling, stocks

UBS after Brexit vote: limit exposure to UK gilts, sterling, stocks
FILE PHOTO: Union Jack flags fly around the Big Ben clock tower at the Houses of Parliament in London, Britain, January 14, 2019. REUTERS/Clodagh Kilcoyne   -   Copyright  CLODAGH KILCOYNE(Reuters)
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LONDON (Reuters) – Investors should limit their exposure to UK assets as financial markets remain vulnerable to political volatility amid deepening uncertainty over the country’s exit from the European Union, UBS Global Wealth Management said on Tuesday.

The recommendation comes after British lawmakers defeated Prime Minister Theresa May’s Brexit divorce deal by a crushing margin, triggering political chaos that could lead to a disorderly exit from the EU or even to a reversal of the 2016 decision to leave.

Market volatility will not subside until a concrete conclusion to the process emerges, said Dean Turner, UK economist at the division of the bank following the vote.

“We do not advocate investors take directional views on sterling, gilts or UK stocks while this clarity void remains so large,” he said.

“Within existing portfolios, investors would be wise to limit any UK exposure at benchmark levels.”

(Reporting by Josephine Mason; Editing by Gareth Jones)

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