Understanding the Brexit Quandary
While investors should be cognizant of the complexities and risks around Brexit, they should be just as aware of the opportunities in select U.K.-based businesses.
|MSCI UK Index||MSCI EAFE Index||MSCI ACWI Index|
|12/31/17 NTM P/E||14.67||15.01||6.22|
|12/31/18 NTM P/E||11.27||11.92||13.01|
|12/31/17 NTM P/B||1.98||1.78||2.36|
|12/31/18 NTM P/B||1.57||1.44||2.01|
|12/31/17 NTM EPS||151.90||136.65||31.62|
|12/31/18 NTM EPS||172.79||144.70||35.04|
|12/31/17 Net Debt/EBTIDA||1.44||2.49||1.99|
|12/31/18 Net Debt/EBTIDA||0.82||2.13||1.89|
For investors with a long-term view who base their valuations on projected cash-flows and profits of select U.K. firms two to four years down the road, Brexit-related setbacks can be overcome, and may well offer opportunities in stocks that are caught up in broad market turbulence but only indirectly exposed to cross-border risks. Current valuations on U.K. stocks on a relative basis at the index level are quite appealing, though select individual names may have better or worse prospects. Successful investing is always about distinguishing share price divergence from individual business fundamentals, within a broader macro environment, in all geographies.