Retail investors withdrew £3.5 billion from UK investment funds in June, according to Investment Association data released today.

By comparison, in the worst month of withdrawals during the financial crisis, January 2008, retail investors withdrew £561 million from UK investment funds. In October 2008, just after the collapse of Lehman Brothers, retail investors withdrew £493 million from UK investment funds. Total assets under management are now around twice as high as they were back then, but June 2016 was still an exceptional month for outflows.

The exodus was led by investors in the property sector, who withdrew £1.4 billion from these funds, leading to some funds suspending trading, and others imposing hefty dilution levies on those who did want to sell.

£2.8 billion was withdrawn from equity funds across the board, with £1 billion of net withdrawals from the UK equity sectors.

£464 million was also withdrawn from ISAs over the course of the month.

Laith Khalaf, Senior Analyst at Hargreaves Lansdown comments:

‘The scale of the exodus from investment funds in June is quite extraordinary, with the Brexit vote eclipsing the financial crisis in terms of putting the frighteners on retail investors in the short term.

The property sector saw the biggest outflows, as investors flocked to the emergency exits, concerned that the economic effects of leaving the EU would damage commercial property prices. Since the vote some property funds have been forced to suspend trading because of the high level of outflows, with others imposing high transactional charges on those wishing to sell. UK and European equity funds also saw heavy outflows over the course of the month, with fixed interest and absolute return funds being the main beneficiaries.

Clearly investors were rattled by the referendum, and switched out of assets they perceived to be at risk from a vote to leave the EU. UK investors who withdrew from equity funds are probably regretting this decision in light of the performance of the stock market since the referendum, and that goes in spades for those who cashed in their ISA allowance, losing that tax shelter forever.

This demonstrates the danger of events-based investing, because even if you do happen to guess the correct outcome, you still might not be able to predict the effect on markets and asset prices.

When it comes to elections and referenda, investors are better off voting with their polling cards rather than their finances. In these situations it pays to keep a cool head, to ignore the inevitable clamour, and to take a long term view on your portfolio.’

(Source: Hargreaves Lansdown)

Ultimate Finance Group, a leading independent provider of finance to UK business, announced that its total loan book to the UK’s SME sector has exceeded £100 million, with significant further funds available to businesses looking for support during this time of post-Brexit economic uncertainty.

Ultimate Finance’s loan book has increased by a third in the last 12 months, a period of record growth for the business. At a time when the vote for Britain to leave the EU is causing unease across the business community, Ultimate Finance’s commitment to support UK SMEs is stronger than ever as it begins ambitious expansion plans.

“The vote to leave the EU has caused concern for a number of our clients and for the wider business community,” explained Ron Robson, chief executive officer of Ultimate Finance. “We remain fully committed to supporting UK SMEs, and with the strong financial backing of our parent organisation, Tavistock Group, we have significant resources available to us, a strong appetite to lend and a tremendous team of people to provide the outstanding service our clients deserve.”

“In uncertain times it is vital that businesses have stable and reliable funding partners that they can rely on and who will not, as the cliché has it, “remove the umbrella when it starts to rain”.  In Ultimate Finance, our clients have that strong, reliable and knowledgeable business partner who will support them through whatever challenges lie ahead.”

“As part of Tavistock Group we have access to significant financial resources and are not dependant on financial markets or banks for our funding.  As a privately owned business ourselves, we understand the realities and pressures facing our clients and stand alongside them.”

According to Robson, the £100 million landmark is just the beginning for Ultimate Finance:

“We have ambitious growth plans that will see us strengthen our position across the traditional areas of Asset, Invoice and Trade Finance whilst also bringing an exciting and innovative pipeline of new products to market to address the changing needs of UK businesses.  We will continue to extend our geographical reach, providing a locally based service, backed up by the strength and commitment of a national business.”

Ultimate Finance already offers a wide range of lending-based products that allows it to offer a tailored solution for virtually any business.

“At heart and in action, we are very like the clients we serve,” concluded Robson. “We are a lean, flexible and helpful team that specialises in giving small and medium sized businesses the support they need to respond swiftly to changing situations. With ample funds to lend, a passion to see our clients succeed and experienced staff that have the freedom to use their own initiative, we are in a great position to ease post-Brexit business woes and surpass our own ambitious expansion plans.”

For further information please visit: www.ultimatefinance.co.uk 

The latest figures from the Lloyds Bank Investor Sentiment Index show a substantial drop in investor confidence, post the results of the EU Referendum. After two consecutive months of improved sentiment, the mood among investors is now at its lowest level since the Index began in March 2013 and has turned negative for the first time.

Perhaps unsurprisingly, investor sentiment is increasingly negative to those asset classes exposed to the UK, with equities and in particular UK property falling sharply into negative territory (declines of 21.75 and 35.36 percentage points respectively). UK gilts also saw sentiment decline steeply, showing a drop of over 15 percentage points.

Sentiment towards cash has also seen a slight fall, and although last week The Monetary Policy Committee voted to leave rates unchanged, there is speculation that the Bank will take some action next month. Inflation expectations in the UK have risen following the fall in the value of sterling, raising the prospect of some price increases, particularly for dollar-based goods.

The continuing flight to safe havens has helped maintain and further the allure of gold, which has seen the greatest positive swing of 16 percentage points. Those assets classes which are typically seen as riskier and less familiar to many investors – commodities, emerging markets and Japanese equities, have also seen sentiment improve as investors look further afield from those asset classes they think may be most impacted by the UK’s split from the EU. Although overall sentiment to Japan remains in negative territory, speculation has also grown that Prime Minister Shinzo Abe is contemplating helicopter money to revive the country with consumption vouchers for lower-income workers to be introduced as a combination of monetary and fiscal policy.

Markus Stadlmann, Chief Investment Officer at Lloyds Private Banking, says:

“We have seen strongly declining sentiment from investors in the aftermath of the Referendum. Initial reactions were clearly very negative to UK assets, although we did see some investors coming back to the table to buy back into UK shares following the initial sell-off.

“We would expect investor sentiment to continue to be susceptible to sharp, short-term shifts as investors absorb the news flow over the next 2-3 months.

“One area where sentiment and market performance have moved in tandem is commercial property, and this is an asset class where we remain extremely vigilant, particularly around issues such as liquidity. Our client portfolios remained resilient over this period, as we had moved away from credit risk and built US positions relative to European exposure.”

Despite the sell-off in the wake of the Referendum, UK equities actually showed positive performance for the month ending on the 1st July. UK gilts rose nearly 5% in this period, whilst UK corporate bonds rose 2.9%. Gold was the strongest performer with a 10% increase, whereas Japanese equity declined 7.5% and UK commercial properly fell by over 10%.

(Source: Lloyds Banking Group)

Fluctuations in the real estate market caused by the UK’s vote to leave the European Union are likely to be shorter-lived and less severe than many investors fear, according to LaSalle Investment Management’s mid-year Investment Strategy Annual (‘ISA’) 2016.

The correction in real estate pricing is expected to be largely restricted to the next 18 months, and medium-term capital inflows into real estate will only be interrupted, not reversed, the ISA finds. It also suggests that, given the ultra-low interest rate and bond yield environment, UK real estate yields are only expected to increase by 40-50 basis points by the end of 2017, even if the country’s political landscape remains unclear. Meanwhile in Continental European, investors will continue to edge up the risk curve as long as the economic recovery continues largely unaffected, but will have one eye on risk contagion from the UK.

Overall, the ISA suggests that some of the fears currently surrounding the real estate market in the country may be overdone. Other findings include:

-The overall impact of Brexit on the Private Rented Sector (PRS) should be limited given the ongoing undersupply.

-Real estate assets with long, index-linked leases are likely to outperform over the next few years.

-The predicted capital market re-pricing will lead to an opportune time to enter the UK market – particularly for US dollar-denominated and Japanese yen-denominated investors.

Elsewhere in Europe, the headwinds facing London’s financial markets should help support the real estate market in cities such as Frankfurt, Paris, Dublin, and to a lesser extent Amsterdam and Madrid. Even before the impact of Brexit, office demand across Europe was undergoing a strong renaissance in cities with strong trends in Demographics, Technology and Urbanisation.

Globally, the ISA says the lower for longer situation actually boosts core real estate returns in the short-run, even as it dampens the long-run outlook for rental income growth.  As a result, real estate values for stabilized assets in major markets outside the UK may continue to increase or hold steady, but the cyclical recovery in fundamentals will be moving much more slowly now.  At the same time, cross-border and domestic capital sources in many countries could narrow their range of target investments to focus on these traditional, core themes.

Jacques Gordon, Global Head of Research and Strategy at LaSalle, said: “Across the globe, the fundamentals of supply and demand appear to be well-balanced going into the second half of the year in most of LaSalle’s major markets. Furthermore, turmoil in capital markets might also open higher-yielding buying opportunities from distressed sellers as the implications of the Brexit vote in the UK ripple around the world.  Although the UK has been the epi-centre for political and financial tremors since June 24^th, the law of unintended consequences suggests that investors should also closely watch for ripple effects in the EU, North America and even all the way to Asia-Pacific.”

Mahdi Mokrane, Head of Research and Strategy for Europe at LaSalle, said: “The UK, and in particular a dynamic London, home to one of the world’s most liquid, transparent, and investor-friendly real estate markets, is likely to reinvent itself outside of the EU, and the overall prospects for the UK outside the EU could well be broadly more positive than what is implied by current market commentators.

“We expect the forecast correction in real estate pricing to be largely restricted to 2016-17 and medium-term capital inflows into real estate will only be interrupted rather than reversed”.

(Source: LaSalle)

Sterling has encountered significant losses in recent days with the increasing support for anti-EU theme from the recent ORB polls conducted regarding the referendum. More than 55% of voters showed their support for leaving EU while only 45% were interested in staying back with EU. The important point to note here is that price action has been driven mostly by change in market sentiments based on results from poll data. The volatility of GBP has consequently increased since the announcement of referendum and has dropped to its lowest levels as last seen in 2008.

GBP has been performing very bad especially against dollar and GBP/USD reached its all-time-low level of around 1.39 during the month of February 2016. It was the time when initial talks about referendum came into picture that caused huge fears among the investors regarding the financial instability of UK. Based on technical analysis from the options market, there is 72 percent chance of GBP/USD pair trading anywhere between 1.32 and 1.51, by June 24th once the results of the referendum are announced. The GBP/EUR exchange rate is meanwhile expected to range between 1.33-1.35 after the voting.

The topic of British Exit from Europe has been discussed for years and became popular during February 2016 after Prime Minister David Cameron promised to conduct a voting for the same by June. Though voting will be held on June 23^rd, it will not result in immediate departure of UK from the European Union. It would commence a multi-year negotiation period on the terms for exiting EU.  Based on polls conducted during last few months, there has been mixed results on the majority’s bias with some polls showing minor leads on either side. The below table from Wikipedia shows the results of various polls conducted regarding the referendum,

Britain has always remained a semi-detached member of European Union and most of the British bureaucrats believe that they can do better alone. Some of them are frustrated by the fact that EU gets benefited more from the UK than UK from the EU.  The recent economic problems of some EU members like Greece have caused huge disinterest regarding the EU membership among British investors.  Though pound has decreased significantly against USD and the trading is done based on shifting expectations for the referendum, GBP/EUR is showing a longer-than-average bullish day’s range as of June 15^th, which is giving a positive outlook for trading GBP. It is an early sign for positive impact on GBP in the currency market, after the steep decline experienced in recent days. The important fact to note here is that Brexit will not only affect GBP, but also Euro.

Based on certain analysis reports, UK leaving the EU could result in loss of more than 950, 000 jobs by 2020 and deficit around £100 billion which is around 5% of their GDP. When looking at possible impacts for each decision, it is important to note that whatever significant ground lost in recent days is likely to be made up relatively fast once the business gets usual after the referendum. But even before voting, many investors are selling GBP as risks are associated more with the decision. If we look at the current account deficit of UK, it clearly indicates that GBP is becoming weaker. UK has a current account deficit of more than 5 times its GDP, which is the worst for any developed nation making this a strong reason for sterling’s weakness in currency market. In the coming days closer to referendum, we can expect to see sterling respond less to economic reports of UK and trade based on Brexit-related updates.

Any pro-Brexit pool can result in further decline of GBP and anti-Brexit news could cause an upward trend on GBP. If the Brexit vote becomes positive and pound hits the lows, it will be a good time to buy GBP as it will definitely bounce back after some time. The Bank of England might come for rescue by announcing interest rate hike to generate a positive sentiment among the investors. Euro will also face downward pressure, if the Brexit vote becomes positive and is already witnessing some volatility based on the poll results.  Trading GBP amid this volatility is a risky affair for currency traders since none of us have a crystal ball. Since the vote is currently too close to call, it might be sensible to lighten up your exposure ahead of the referendum.

Private investors are seeing this morning’s market falls as a buying opportunity. 80% of the trades placed through Hargreaves Lansdown’s share dealing service this morning were purchases. This compares to around 60% on an average day.

Senior Analyst at Hargreaves Lansdown, Laith Khalaf commented: ‘Private investors are clearly seeing today’s market fall as a buying opportunity, and are out in force bargain-hunting. The most popular stocks are also those which have seen their prices hit hardest this morning, namely the banks and house builders.

We know that private investors have been sitting on the sidelines until after the referendum, and early indications are there may be some buying activity now the market has dropped.’

The UK stock market fell sharply this morning, but has since staged a bit of a recovery, though it is still down around 4.5%. The FTSE 100 has been bailed out by a falling pound, but the FTSE 250 mid cap index has not been so lucky- it has fallen by over 8% by lunchtime, because it is more domestically focussed and has fewer overseas earnings. Just to give some context to the fall, the FTSE 100 is still currently trading at above 6,000, around 10% higher than the low of 5,537 it fell to in February of this year.

The FTSE 100 has fallen further in the past. On Black Monday, in 1987, it fell by 11%. On 10^th October 2008, it fell by 9%. On 11th September 2001, it fell by 6%.Nonetheless, today’s fall so far makes it one of the worst days the Footsie has witnessed.

Laith Khalaf says: ‘The Footsie has been bailed out by the Sterling collapse, because all its international revenues streams are now worth that much more in pounds and pence.

Financials and house builders are bearing the brunt of the pain, with Lloyds bank being one of the biggest fallers. It’s probably safe to say the public sale of the bank is now firmly in the long grass, and the return to full private ownership of both Lloyds and RBS has been knocked off course.

It’s also been a bad day to be a mid-cap company - the FTSE 250 is suffering to a much greater extent than the blue chip index. Mid-cap companies have sold off harder because they are perceived to be more risky, and tend to be more domestically-focused with fewer overseas earnings.’The 10 most popular shares bought by private investors this morning, ordered by the number of trades placed are:

Below are the top ten funds purchased, ordered alphabetically. Tracker funds have proved very popular today as investors have simply sought blanket market exposure. However the tried and trusted names of the industry are proving popular too.

(Source: Hargreaves Lansdown)

Hours after the EU Referundum results were revealed, UK Head of Banking and Capital Markets at PwC Simon Hunt comments on the impact that Brexit will have on the banking sector in the country.

The UK is one of the world’s leading financial centres. The banking sector plays a major part in generating exports of £23bn to the EU, which helps to drive an overall trade surplus in financial services of £20bn. Retaining this position is the challenge that banks and all stakeholders may now have to consider.
One of the most significant benefits of EU membership to the banking sector is the ability to access the Single Market via the passporting regime and the loss of passporting benefits would have an impact on the ability of banks authorised in the UK to offer products and services for EU clients.

This impact will not be limited to the UK headquartered banks but will also impact non-EU headquartered banks who have used the UK as a base for their European operations.

Overseas banks currently using the UK as a base for accessing the EU market and employing an estimated 115000 staff are likely to be looking closely at their operations in the UK in the context of the leave vote. Find the best PIA Reservation from Pakistan to anywhere in the World with Malik Express.

The result of the vote does not represent the end of the debate that has impacted markets in recent months. Months, and possibly years, of negotiation will now follow before banking organisations will have clarity on what access UK-based FS organisations will have to EU countries or the rules they must comply with to secure this access.

We are already starting to see the short-term impact on the market as efforts are made to reinforce confidence in the UK banking sector. However, history has taught us that UK business is adaptable and the banking sector is one of our strongest industries and will continue to make a major contribution to the UK economy.  Collectively, the financial services sector accounts for 8% of total UK economic activity and directly employs 1.1 million people - around 3.6% of the total UK workforce, generating income, investment and exports.

This result could be taken as a major opportunity for banks to work with regulators, investors and clients in order to shape a new rulebook fit for the new climate.

(Source: PwC)

After a night of counting the votes, it was revealed at exactly 06:00 BST this morning that Britain had voted to leave the EU. Prime Minister David Cameron has announced that he is stepping down by October, saying:

“I fought this campaign in the only way I know how – which is to say directly and passionately what I think and feel- head, heart and soul. I held nothing back. I was absolutely clear about my belief that Britain is stronger, safer and better off inside the European Union. And I made clear that the Referendum was about this and this alone – not the future of any single politician, including myself. But the British people have made a very clear decision to take a different path. And as such, I think that the country requires fresh leadership to take it in this direction. “

The referendum has seen the highest turnout at a UK-wide vote since 1992 – 71.8% with more than 30 million people voting. 51.9 % of those voted to Leave by 48.1%. While England and Wales voted strongly for Britain to leave the EU, London, Scotland and Northern Ireland strongly disagreed with Brexit.

UKIP Leader Nigel Farage, who has been campaigning for Britain to leave the EU in the past two decades, said that today would “go down in history as our independence day”.

As the UK heads for Brexit, the pound has fallen dramatically hitting a 30-year low and plummeting to $1.3236 at one stage earlier this morning. In the opening minutes of trade, the FTSE 100 Index fell more than 500 points before regaining some ground.

Laith Khalaf, Senior Analyst at Hargreaves Lansdown comments: ‘Global stock markets have taken a Brexit hit, with European markets actually falling more than the Footsie. Safe haven assets have soared as investors sought security, with gold rising 5% and UK bond yields plunging to historic lows.On the stock market, banks and housebuilders have been hit particularly hard this morning as markets try to factor in the Brexit effect on the UK economy.Sterling has fallen to its lowest level for over 30 years , which will mean holidaymakers heading abroad in the coming weeks will have to dig extra deep to buy foreign currency.Investors should carefully consider their plans and avoid a knee-jerk reaction. The coming days are likely to be choppy on the stock market as it digests the ramifications of Brexit, and further falls are possible.However markets will bounce back at some point, and investors who switch to cash risk buying back into the market at a higher level, and ending up in a worse position than if they had just stayed put.’

Bank of England governor Mark Carney said this morning that: "Some market and economic volatility can be expected as this process unfold. But we are well prepared for this. The Treasury and the Bank of England have engaged in extensive contingency planning and the Chancellor and I have been in close contact, including through the night and this morning.

"The Bank will not hesitate to take additional measures as required as markets adjust and the UK economy moves forward."

As the Article 50 two-year deadline approaches following the referendum results, David Cameron will be put under pressure to "steady the ship" over the coming weeks. Remain campaigners believe that it is possible that the Brexit could result in reverting to trading with the EU under World Trade Organization rules, which would involve exporters being hit by import taxes or tariffs.

After all 32 local authority areas in Scotland returned majorities for Remain, Scotland's First Minister Nicola Sturgeon has said that the referendum results make it “clear that the people of Scotland see their future as part of the European Union".

Germany's foreign minister Frank Walter Steinmeier commented that today is "a sad day for Europe and Great Britain".

British citizens go to the polls today voting in a historic referendum which will decide Britain’s future. According to provisional figures from the Electoral Commission, 46, 499, 537 people are entitled to take part in today’s referendum in the UK and Gibraltar – the highest number of voters ever recorded for a UK election. Polling stations opened at 07:00 BST and will close at 22:00 BST. Once the polling stations close, sealed ballot boxes will be transported to the count venues to each of the local counting areas, which include 38 local government areas in England, Scotland, Wales, and 2 in Northern Ireland and Gibraltar. The final result is expected to be revealed on Friday morning according to the Electoral Commission.

Traditionally, turnout in referendums is low – only 42 % of the population voted on a proposed new electoral system in 2011. However, analysts predict that the high-profile campaigning from the past four months is highly likely to boost figures.

Mixed predictions were offered by a final rash of polls – with two putting Leave ahead and two suggesting leads for Remain. YouGov research predicts that people supporting the Leave campaign are more likely to vote, which means that a low turnout could damage the Remain campaign’s prospects.

Politicians supporting both sides made final pitches yesterday as polls predicted the result is on a knife-edge on the final day of campaigning before the vote. PM David Cameron told supporters in Birmingham that “It is a fact that our economy will be weaker if we leave and stronger if we stay”.