Use Brexit volatility as buying opportunity

Geopolitical headwinds mean markets are expected to remain volatile in the near term with investors reminded to revisit their portfolios to take advantage of buying opportunities.

Following talks with President Macron in France and German Chancellor Angela Merkel, UK Prime Minister Boris Johnson had a better chance of securing a Brexit deal with the European Union.

Last week, the PM was told Britain had 30 days to find a solution to the Irish backstop problem which would prevent a hard border between Northern Ireland and Ireland.

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Nigel Green, chief executive of financial advisory group deVere Group, said the EU would want to avoid a no-deal scenario as much as the UK.

“There does seem to be a glimmer of hope of the UK securing a Brexit deal with the EU. This is largely due to fears that a no-deal Brexit will seriously hit EU economies, many of which are already on the brink of a recession, including the largest one – Germany.

“The last thing the EU needs is the UK to crash out in a no-deal scenario, dragging down its own vulnerable economies. As such concessions towards UK Prime Minister Boris Johnson’s approach seems increasingly likely.”

Green said investors should take advantage of this near-term volatility and use it as a buying opportunity for their portfolios, as expensive stocks could become temporarily cheaper. They should also ensure portfolios were properly diversified.

“Fluctuations can cause panic-selling and mis-pricing. Sought-after stocks can then become cheaper, meaning investors can top up their portfolios and/or take advantage of lower entry points. This all typically results in better returns,” he said.

“A good fund manager will help investors seek out the opportunities that turbulence creates and mitigate potential risks as and when they are presented.”

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