Fear and uncertainty after #Brexit - Peregrine Group CFO Robert Katz
The British withdrawal from the European Union (Brexit) would very possibly have an effect on South African businesses, although some industries will be harder hit than others – and some might see opportunities. “Personally I don’t think Brexit is a good thing,” says Robert Katz, CFO of wealth and asset management firm Peregrine Group. “South Africa is a risk-on economy. That means that when there are global jitters, South African stocks get sold off and the rand comes under pressure.”
- Peregrine Group CFO Robert Katz was nominated for the 2016 CFO Awards. Suggest nominations for the 2017 CFO Awards by clicking here.
While stockbrokers are benefiting from the activity on the global stock markets, asset managers get to deal with anxious clients hungry for insight in the ramifications of Brexit. "I am not convinced that of a lot of people truly know what it means," says Rob, who was nominated for the 2016 CFO Awards. He says a lot will depend on the way the British separation from the EU will play out over the next few months. "It is too early to say what the effect on the world economy will be and it is especially premature to give a definitive answer about the effect on South Africa."
"There is a lot of uncertainty in the world markets and that causes panic. Markets are run by fear and greed and at the moment it is fear that is gripping the markets. It is not a pretty picture. The rand is one of the most liquid emerging market currencies being traded, which means it will among the first to be sold. The direct effect of Brexit on South Africa still has to become clear".
Every South African business will be affected by currency wobbles and macro-economic effects, but some will be harder hit than others, says Rob. "Certain businesses will be more affected than others, for example property businesses with European property interests will feel the pinch."
Stockbrokers can benefit from nervous markets and earn more brokerage fees as stocks are being bought and sold, but Rob warns that caution is still required. "We trade the world markets and when there is volatility, stocks get traded. There are always opportunities, but you need to be careful not to become cowboys. Markets overreact. Things are never as bad - or as good - as they seem."