Brexit Still Makes Impact Felt in World Economy

By Richard Cox

Over the last few years, there have been few political events that have been as important as the Brexit vote in the UK.  For those unfamiliar, this was essentially a popular vote that allowed the British government to break away from the European Union and the implications for the world economy are still being felt.  

For many, the Brexit vote came as something of a surprise.  In the initial election polls, it actually looked as though British citizens would vote to remain a part of the European Union in a measure of solidarity with the broader region.  But, as it turns out, there was major discontent within the UK about many of the economic policies that were being forced upon British citizens and this ultimately led to the surprise vote and the Brexit event — essentially a break from the Eurozone and its monetary systems.

Impact on Global Stock Markets

From an economic perspective, the impact on global stock markets is still being felt.  There was a great deal of added uncertainty that was created for the world financial system because it was not entirely clear how these new policies would work out. For many UK investors, this led to a dramatic increase in the use of exchange traded funds as they allow access to a wide number of financial instruments in assets around the world.

For regional investors, one of the most important assets from the UK perspective is the FTSE 100 index.  This is a critical stock benchmark that tracks the performance of the 100 largest companies in the UK and it gives many key indications about the overall strength of the British corporate economy.   On a year to date basis, the index is still higher for the period but the gains have been muted given the geopolitical uncertainty that the Brexit vote created.  But investors could still benefit from long positions on the index when implementing exchange traded funds strategies from the bullish perspective.

For some, it might appear as though a major political event what like what has been seen in Great Britain might only impact the structure of the government itself.  But when we look at the state of the economy within the country and around the world, we can see that this extends much further.  Investors can capitalize on these trends using exchange traded funds and remaining aware of the modern politics that are influencing the region.