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As the uncertainty of Brexit rises, fund managers recommend staying away from UK assets

May 15, 2019 21:04
source: Global Forex

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Selling the pound, avoiding British government bonds, and continuing to wait for the clearing of the Brexit process. this isfundManagers and strategists suggested that they choose to reduce their exposure to the UK as the Brexit is unclear and trade tensions escalate.

BlueBay Asset Management is shorting the pound and British government bonds, while UBS Wealth Management is shunning British government bonds, while Nomura International Plc, which has long been bullish on the pound, has terminated its buy-in suggestion for the pound.

In the past week, the pound was at G10currencyOne of the worst performing currencies, the Brexit negotiations between the British Conservative Party and the opposition Labor Party have been slow and there are no signs of progress. The British Prime Minister Theresa May is facing pressure from her own side to ask her to abandon the process and step down. The British Prime Minister’s Office said on Wednesday that it will vote on the Brexit bill in the week of June 3.

"I don't think there will be any progress in the negotiations between the Labor Party and the Conservative Party," said Mark Dowding, chief investment officer at BlueBay. "In the end, Teresa May stepped down, a tougher Brexit party. Replace her. This shows that the risk of a hard retreat in November is higher."

According to the latest data from the US Commodity Futures Trading Commission (CFTC), options traders have increased their bearish bets on the pound this week, while asset managers are still shorting the pound, and leveraged funds cut their net long position to the lowest since March this year. Level. The pound exchange rate has been falling for the past two months. At the beginning of this year, the pound exchange rate performed strongly and became the best performer among similar currencies.

Daw Ding said that the market is still too complacent about the political situation. The Brexit Party, led by Nigel Farage, used the differences between the two major political parties and called for a quick exit from the EU without an agreement, leading the next week in the EU parliamentary elections. .

Doutin said, “It seems that 'no agreement' or 'no off-European' seems more likely than a negotiated strike agreement.” In the past two years, Daddin’s negative position on British pound and British government bonds In and out, now he believes that "both have asymmetric risks and will weaken."

Due to the uncertainty of Brexit, UK government bonds have risen so far this year, but fund managers are worried that if the UK's moderate exit from the EU raises the possibility of policy tightening, or if a serious non-agreement exitsCreditRisk, bond prices may also fall easily.

Gary Kirk, founding partner of TwentyFour Asset Management, said that considering the US space to cut interest rates, investors who seek safe-haven assets and hedge against exchange rate risks are better than British government bonds. select.

Maximilian Kunkel, Germany's chief investment officer at UBS Wealth Management, said the Bank of England was in trouble due to Brexit and its next policy move was unpredictable. As of December 2018, UBS Wealth Management managed $2.26 trillion in assets.

"We don't think there is any significance in trading UK government bonds," Kunkel said. "In any case, our attitude towards the UK has become relatively cautious, because regardless of the outcome of Brexit, the UK economy may eventually suffer. ”

(Article source: Global Forex Network)

                (Editor: DF134)

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