Friday Email: 24 June 2016
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
I must say that I am shocked. The result is upon us and the British public has voted to leave the European Union with the inevitable plunge in the markets. It is difficult to say how far they will fall and for how long. The uncertainty regarding the future will last for quite a while. Will Cameron resign? Will Northern Ireland join the south? Will Scotland have another referendum? Will there be a general election? What happens now in the rest of Europe?
Photo-me produced excellent numbers on Tuesday that were received by the market very badly. They doubled their commitment on the dividend from a 10% increase to a 20% increase in each of the next two financial years. They hit a 12 month low of 126p, but have sinced bounced back to 137p as investors recognised the strength of the yield on offer over the next few years. Add to that the expected growth in the laundry business and the strong balance sheet with over £50 million and the initial reaction seemed well overdone. Following the Brexit vote, they, along with quite a few others will be big beneficiaries of currency translation on the face of it. However, they will fall heavily along with most stocks when trading starts later on today.
I am up early as I have to drive my son to the Goodward festival of speed and although the referendum result is not yet confirmed from 5.08 am to 5.37 am the FTSE 100 future has fallen from minus 450 to minus 550. The results that still have to come in are all from England where some of the results are showing that over 60% want to leave the EU, so as I prepare to set off, it is clear that we will leave the EU. Looking at the voting, it is quite amazing how they are spread across the country. In some areas really large percentages wanted to remain and in others really large percentages wanted to leave. London has voted overwhelmingly for remain. I am glad I will be driving rather than watching the markets this morning! It's 6.01, I am signing off. The FTSE 100 is down 564, the pound is at 1.34 to the dollar and crude oil is down 3 dollars a barrel.
The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.
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Read next: 17 June 2016
We are now in the home straight as far as the referendum is concerned and the odds of a Brexit have shortened with the bookmakers and the market does not like it one bit. The indices have plummeted as investors accept that the predictions of a major shock to the UK economy will occur on the event of Brexit. Added to this, I think it is fair to say that nobody knows what will happen in the event of Brexit which will lead investors to exit UK equity positions in the short term at least. For my part, either way, I see it as an interesting opportunity for investors to look at Multinational companies. Their business should not be affected particularly by Brexit as they operate legal entities across the globe. That said, even the US authorities are considering Brexit implications when setting interest rates, so perhaps the impact will be global. This time next week, we will know the answer...
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