Viewpoint – Brexit from 6,500 Miles Away
The shock of waking on Friday morning to find that the UK public had voted to leave the EU was compounded by the prospect of flying to Kuala Lumpur on the Sunday. Not that I dislike meeting our Islamic investors in Malaysia, quite the opposite, but I feared that the timing could not be worse and that everyone would be scared and with no desire to invest in anything until the dust had settled. Thankfully I was wrong.
They say that bad news travels in threes, but I couldn’t determine which was the worst, voting to leave the, the UK loosing its AAA rating or England losing to Iceland in the football! Certainly plenty of topics for discussion with both institutional and private investors, but the mood was fairly upbeat.
There seemed to be a sense of relief that it was UK rather than the Malaysian politics making the headlines for a change, and with Malaysian business tycoon Yeoh Tiong Lay appearing on television excited by the prospect of adding further UK assets to his YTL Corporation at a reduced price, this message of potential opportunity was a recurring theme.
I’ve spoken before about the resilience and flexibility of Islamic investors, with equal appeal in buying UK real estate at a reduced price, sticking with US Dollar investments for a while and picking and choosing from the best of Continental European assets.
The exchange rate will clearly make a big difference. The heyday of Malaysian investment into the UK was with the exchange rate below 5.5 Ringgit to the Pound. It’s been a long 12 months since the Malaysian currency was at that level, but at 5.3 to the Pound at the time of writing it must be tempting again.
Discussion of course was focused on defensive UK sectors that would be largely immune from the fallout from leaving the EU, with City of London offices probably not the best place to invest at the moment.
So, a silver lining and a relief for me. 6,500 miles away certainly provided a refreshing perspective and with Islamic finance already a global business, perhaps an opportunity for the UK to apply its skill set in that regard to an even larger audience.