Brexit 2.0 - What Does it Mean for You? - Profit Hunter by Equitymaster
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Brexit 2.0 - What Does it Mean for You?

Feb 1, 2019

Richa Agarwal, Research analyst

Brexit is back in the news.

Yes, the whole saga is still ongoing, and the United Kingdom is still very much a part of the European Union (EU).

Since the referendum and the decision to leave the EU in 2016, Brexit has proved itself to be a largely unscripted, improvised, messy drama with no predictable conclusion ahead of the scheduled deadline of March 29.

Two weeks ago, British lawmakers rejected Prime Minister Theresa May's Brexit deal agreed with the EU, and asked the PM to renegotiate the contentious deal.

Now while the British Parliament wants to re-negotiate, the EU has firmly insisted that the Brexit deal is not open for renegotiation.

Does the rejection mean that Brexit is not happening?

Or does it imply that the UK will leave the EU without a deal in place?

Well, no one knows yet!

With just over two months to go until the scheduled Brexit date of March 29, there isn't much clarity about the situation as market participants across the globe watch on anxiously.

Uncertainty over Brexit carries over to Indian businesses too.

According to industry body, Federation of Indian Chambers of Commerce & Industry, currently about 800 Indian companies operate in the UK, and most of them use it as a base and a gateway to Europe.

A no-deal Brexit could restrict Indian companies' access to Europe, and companies will need to incur additional costs to set up offices and build capacities in the EU.

Not to mention the impact on countless businesses which trade with the UK, having to renegotiate tariffs and trade deals.

The fate of Brexit and other headwinds are bound to keep the global economy and India's macro variables uncertain in the months to come.

Not to mention the Union Budget due today, and India's own general elections in the next few months will add to the volatility in the markets.

But stock markets have always endured such uncertainties. And the investors who have had the grit and courage to buy the best businesses during times of great uncertainty have had little to complain about.

Picking businesses that can withstand every economic, regulatory, political and market vulnerability in such volatile conditions is the key to successful investing.

One can make good gains with a careful selection of stocks and long-term horizon, irrespective of the index levels.

Using this approach, my service, Hidden Treasure has beaten benchmark indices nearly three times over a period of more than 10 years.

And that is because we don't care where the markets are headed, or try to time our recommendations. We simply focus on the fundamentals and wait for stocks to catch up to their intrinsic value.

Brexit or not, the key is to stay invested and add quality stocks as and when the opportunity presents itself.

I have been keeping an eye out for attractive smallcaps to recommended to my Hidden Treasure subscribers.

So, however volatile the global markets get, these 4 smallcap stocks will only come out stronger once the dust settles.

Regards,

Richa Agarwal
Richa Agarwal (Research Analyst)
Editor, Hidden Treasure

PS: Richa has named 4 companies that will rebound from the crash to reach great heights - you can get them here.

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