CFA Institute survey shows global investment professionals think impacts of Brexit will be ongoing

Tuesday 2 August 2016

  • Further exits from the EU thought to be quite likely, though wholesale EU disintegration seen as unlikely
  • UK fragmentation also seen as likely and strong belief that ‘Brexit means Brexit’
  • Most expect uncertainty to last a year, but 44% expect it to last more than a year

CFA Institute, the global association of investment professionals, has asked its global member base to gauge the likelihood of potential outcomes of a British exit (Brexit) from the EU. The purpose of the survey was to understand global investors’ views on the likely impact of United Kingdom’s vote to leave the European Union, following the referendum on 23 June 2016.

More than 2,000 investment professionals participated in the survey, with 50% of respondents based in the EMEA region. Among other questions, they were asked to indicate the likelihood of the following consequences of Brexit, in terms of their probability of occurrence by 2026:

  • UK fragmentation (i.e. Scottish independence)
  • EU wholesale disintegration
  • EU strengthening (federal state)
  • NATO disintegration
  • More ‘exits’ from the EU
  • No significant changes
  • Brexit will not happen

UK fragmentation is rated as most likely, with 59% of respondents regarding it as more likely than not. More exits from the EU came next in the list with more than 48% of respondents seeing this as likely and just 26% thinking it unlikely. NATO disintegration was regarded as being the least likely outcome.

Most respondents expect the uncertainty following the referendum vote to last for up to six months (33%) or for between six and 12 months (25%), and a further 26% believe that the uncertainty may persist for up to two years.

Half of respondents also expect firms from their own local market to reduce their presence in the UK. Just 5% indicated that they thought firms from their local market might increase their presence in the UK.

In terms of the relative attractiveness of international financial centres, Frankfurt and Dublin are thought most likely to emerge as ‘winners’ from Brexit, with 69% and 62% of respondents picking them as likely beneficiaries. Most expect little change in the status of financial centres outside the EU. 82% of respondents expect London to be a loser as a consequence of Brexit.

Says Paul Smith, CFA, President and Chief Executive of CFA Institute:

“In the immediate aftermath of the Brexit referendum vote, we can see considerable variance over how long investment professionals expect market uncertainty to last, but that uncertainty will be with us for a while at least. In addition, while changes in the relative attractiveness of one financial centre over another will see some lose ground and others gain, those changes can be disruptive for clients and for investment management businesses. As the consequences of Brexit continue to unfold and evolve, the role of our organisation is to help our members and CFA exam candidates understand what these changes mean at a global, regional and local market level, prepare for them, and contribute to an investment management industry which protects clients' interests and puts investors first."

Says Will Goodhart, Chief Executive of CFA UK:

“This survey summarizes the views of investment professionals from around the world on the likely impact of Brexit. They make challenging reading for the financial services sector in the UK and for the policymakers that will work on the Brexit negotiations. 60% of EU respondents expect local financial services organisations with a UK presence to reduce that presence. The numbers are better from non-EU respondents, where just 44% of respondents expect their local financial services companies to cut back in the UK, but these are disturbing data. As we have seen in recent times, things can change rapidly, but as it stands a great deal of work will need to be done to maintain the City’s competitiveness as a global financial centre and to secure the broader economic benefits that flow from that.”

About the survey

The survey was undertaken between 13 and 21 July 2016. 2043 investment professionals completed the survey: 1029 from EMEA, including 385 from the UK; 550 from the Americas and 464 from APAC.