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Brextension – Part 2

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Insights and Market Perspectives

Brextension – Part 2

Author: The editor's desk

April 12, 2019

The European Union (E.U.) granted British Prime Minister Theresa May another new Brexit deadline this week – one that, so far, has received a decidedly ho hum response from investors. While the extension until October 31 helps alleviate immediate concerns of a hard Brexit, it remains contingent on the United Kingdom (U.K.) voting in European elections late next month and would be moved up to June 1 if they don’t. As such, any relief being felt by investors may be temporary and could give way to more uncertainty soon enough.

Here’s a quick take from members of AGF’s investment management team on the latest chapter in this ongoing Brexit saga:

Kevin McCreadie, CEO and Chief Investment Officer, AGF Management Limited  

The deadline extension doesn’t solve all of Europe’s recent economic woes, but after weeks of nail-biting uncertainty, it should provide some temporary relief to investors and could help global equity markets move higher.

Jean Charbonneau, Senior Vice-President and Portfolio Manager, AGF Investments Inc.

An extension eases near-term pressures, but also adds to political tensions within Europe. France’s President Emmanuel Macron, for instance, has warned that Britain’s “euroskeptics” could jeopardize the E.U.’s decision-making as long as the U.K. remains a member.  But Angela Merkel, Germany’s Chancellor, has been more accommodating in allowing the U.K. more time. In our view, this typifies a risk that is being overlooked by markets and the longer Brexit drags on, the greater the chance of conflict between E.U. members becomes. 

Maksim Piskunov, Associate Portfolio Manager, AGF Investments Inc.

The markets expected the can to be kicked down the road.  Now we need a path to break the log-jam. Outside of parliamentary haggling, the next decision to watch is the U.K.’s participation in the E.U. elections on May 23. And if that does not happen and a deal is not reached, a no-deal Brexit is still possible on June 1. It’s the one outcome people want least – so it’s likely to be avoided. 

Mark Stacey, Senior Vice-President and Co-Chief Investment Officer, Highstreet Asset Management Inc.

The U.K. market had already priced in a lot of the Brexit bad news at the end of 2018, but since the beginning of this year, it has started to outperform Europe. From a factor perspective, the market has been quite cyclical with higher beta stocks leading the way.


Commentaries contained herein are provided as a general source of information based on information available as of April 11, 2019 and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and the manager accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Investors are expected to obtain professional investment advice.

AGFiQ Asset Management (AGFiQ) is a collaboration of investment professionals from Highstreet Asset Management Inc. (HSAM), a Canadian registered portfolio manager, and of FFCM, LLC (FFCM), a U.S. registered adviser. This collaboration makes up the quantitative investment team.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), Highstreet Asset Management Inc. (Highstreet), AGF Investments America Inc. (AGFA), AGF Asset Management (Asia) Limited (AGF AM Asia) and AGF International Advisors Company Limited (AGFIA). AGFA is a registered advisor in the U.S. AGFI and Highstreet are registered as portfolio managers across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. AGF AM Asia is registered as a portfolio manager in Singapore. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

The ‘AGF’ logo is a trademark of AGF Management Limited and used under licence.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

© 2021 AGF Management Limited. All rights reserved.

Written by

The editor's desk

The editor's desk

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