Tracking 65,384 property sales between August 2018 and August 2019 from start to finish, the monthly updated local house market insights tool shows the average differences between asking prices on Rightmove and their actual sold prices lodged at the HM Land Registry.

It was revealed that, out of the 575 assessed properties in South West London, sellers were dropping their asking prices by an average of over £71,000 to secure a sale.  A similar story was seen in North West London, where 206 vendors reduced their initial prices by almost £69,000 on average.

Below are the top 10 areas with the greatest drops have been seen:

Property Solvers co-founder Ruban Selvanayagam commented: “Even some of the most experienced estate agents are failing to understand the current realities.” 

“Arguably due to the cloud of uncertainty surrounding Brexit, we’re operating in a buyer’s market at the moment and the fact that agents knowingly state exaggerated valuations at the initial stages is a disservice.”

Bearing in mind that prices in the South tend to be higher than in the Midlands and North, some of the lowest asking to sold reductions were seen in Wigan (-£3,890), Hull (-£4,258), Doncaster (-£4,705), Sheffield (-£4,884) and Sunderland (-£4,915).

Selvanayagam goes on to comment: “When we speak to homeowners, we always underline the importance of referring to HM Land Registry sold price data.  It’s never been easier to access this kind of information online.”

"Of course, it’s never a bad idea to incorporate a bit of wiggle room into the price.  Also, if a client has spent a significant amount of money on extending / refurbishing or there’s more floor space then, of course, it makes sense to command more.”

“However, overly inflated price valuations in the current sales climate invariably leads to properties lingering on the market for a lot longer than they need to.”

Do such disparities between asking and sold prices mean that the market is crashing?

“I would say not – although much would depend on the outcome of the seemingly endless Brexit negotiations.  A ‘no deal’ or disruptive exit from the European Union could, however, change the trajectory of house prices.  However, it’s too early to predict at this stage.”

Trump vs. China

Back in 1930, the US introduced the Smoot-Hawley Tariff Act, which raised their already high tariffs, triggering a currency war and, as economists argue, exacerbating the Great Depression. With President Donald Trump’s threat to put 10% tariffs on the remaining $300 billion of Chinese imports that aren’t subject to his existing levies, sending markets tumbling from Asia to Europe, the question on everyone’s lips is: Is history about to repeat itself?

In August, in a bid to hit back against Trump’s administration, Beijing allowed the Chinese yuan to plummet past the symbolically important $7 mark. Economists suggest that this currency manipulation is China’s attempt to display dominance and gain the upper hand in the trade war between the two countries as devaluating its currency could help counteract the effects of US’s long list of tariffs on Chinese goods.

As protectionist actions escalate and US-China relations continue deteriorating, investors and markets have been growing increasingly concerned even though Trump has delayed the imposition of his new tariffs until December. A full-blown trade war wouldn’t be good news to anyone and could seriously weaken the global economy, as the IMF has warned, making the world “poorer and more dangerous place”. Both sides are expected to experience losses in economic welfare, while countries on the sidelines could experience collateral damage. Furthermore, if tariffs remain in place, losses in economic output would be permanent, as distorted price signals would prevent the specialisation that maximises global productivity. The one thing that’s certain, no matter how things pan out, is that there will be no winners in this war.

Economists suggest that this currency manipulation is China’s attempt to display dominance and gain the upper hand in the trade war between the two countries as devaluating its currency could help counteract the effects of US’s long list of tariffs on Chinese goods.

Cyberattacks & data fraud

Millions, if not billions, of people’s data has been affected by numerous data breaches in the past couple of years, whilst cyberattacks on both public and private businesses and institutions are becoming a more and more frequent occurrence. With the deepening integration of digital technologies into every aspect of our lives and the dependency we have on them, cybercrime is one of the greatest threats to every company in the world.

Cyberattacks are rapidly increasing in size, sophistication and cost, as cybercrime and data breaches can trigger extensive losses. In 2016, Cybersecurity Ventures predicted that cybercrime will cost the world $6 trillion annually by 2021, up from $3 trillion in 2015. According to them, ”this represents the greatest transfer of economic wealth in history, risks the incentives for innovation and investment, and will be more profitable than the global trade of all major illegal drugs combined”.

 Emerging Markets crisis

Since the early 1990s, emerging markets have been a key part of investors’ portfolios, as they have been offering strong returns and faster growth. However, global trade tensions, a stronger US dollar and rising interest rates have hit emerging markets hard. Still far from catching up with the developed world, many supposedly emerging markets are developing at a slower pace, which combined with the threat of a global trade war and higher borrowing costs on the rise, has made investors pull in their horns. Emerging markets are the ones feeling the strain and financial panic has been gripping some of the world’s developing economies.

With political instability, external imbalances and poor policymaking which has led to full-blown currency crises in the two nations, Turkey and Argentina have been at the centre of an emerging market sell-off last year. But they are not the only emerging economies faced with a currency crisis – according to the EIU, some economies which are already in the danger zone and could suffer from the same currency volatility include Brazil, Mexico and South Africa.

Still far from catching up with the developed world, many supposedly emerging markets are developing at a slower pace, which combined with the threat of a global trade war and higher borrowing costs on the rise, has made investors pull in their horns.

If the currency crises in Turkey and Argentina continue and develop into banking crises, analysts predict that investors could abandon emerging markets across the globe. “Market sentiment remains fragile, and pressure on emerging markets as a group could re-emerge if market risk appetite deteriorates further than we currently expect”, the EIU explains.

 Climate crisis

In recent months, the media is constantly flooded with reports on the horrifying environmental risks that the climate crisis the Earth is in the midst of poses, but we’re also only starting to come to grips with the potential economic effects that may come with it.

Despite the significant degrees of uncertainty, results of numerous analyses and research vary widely. A US government report from November 2018 raised the prospect that a warmer planet could mean a big hit to GDP. The Stern Review, presented to the British Government in 2006, suggests that this could happen because of climate-related costs such as dealing with increased extreme weather events and stresses to low-lying areas due to sea level rises. These could include the following scenarios:

• Decrease in agricultural areas crop yields due to hotter weather and draught.
• Rebuilding roads that have been destroyed by flooding caused by rising seas and more frequent hurricanes.
• Having to build more efficient power grids because the existing ones are not able to withstand extreme weather conditions.

Due to climate change, low-lying, flood-prone areas are currently at a high risk of becoming uninhabitable, or at least uninsurable. Numerous industries across numerous locations could cease to exist and the map of global agriculture is expected to shift. In an attempt to adapt, people might begin moving to areas which will be affected by a warmer climate in a more favourable way.

A US government report from November 2018 raised the prospect that a warmer planet could mean a big hit to GDP.

All in all, the economic implications of the greatest environmental threat humanity has ever faced range from massive shifts in geography, demographics and technology – with each one affecting the other.

Brexit

Fears that the UK could be on the brink of its first recession in 10 years have been growing after figures showed a 0.2% contraction in the country’s economy between April and June 2019. A weakening global economy and high levels of uncertainty mean the UK’s economic activity was already lagging, but the potential of a no-deal Brexit and the general uncertainty surrounding the UK’s departure from the EU, running down on stock built up before the original 29^th March departure date, falling foreign investment and car plant shutdowns have resulted in its GDP decreasing by 0.2% in Q2. This is the first fall in quarterly GDP the country has seen in six and a half years and as the new deadline (31^st October) approaches, economists are concerned that it could lead to a second successive quarter of negative growth – which is the dictionary definition of recession.

And whilst the implications of Brexit are mainly expected to be felt in the country itself, the whole Brexit process displays the risks that can come from economic and political fragmentation, illustrating what awaits in an increasingly fractured global economy, e.g. less efficient economic interactions, complicated cross-border financial flows and less resilience and agility. As Mohamed El-Erian explains: “in this context, costly self-insurance will come to replace some of the current system’s pooled-insurance mechanisms. And it will be much harder to maintain global norms and standards, let alone pursue international policy harmonisation and coordination”. Additionally, he goes on to note that tax and regulatory arbitrage are likely to become more common, whilst economy policymaking could become a tool for addressing national security concerns.

“Lastly, there will also be a change in how countries seek to structure their economies”, El-Erian continues. “In the past, Britain and other countries prided themselves as “small open economies” that could leverage their domestic advantages through shrewd and efficient links with Europe and the rest of the world. But now, being a large and relatively closed economy might start to seem more attractive. And for countries that do not have that option – such as smaller economies in east Asia – tightly knit regional blocs might provide a serviceable alternative.”

The deadline to negotiate the exit was recently prolonged to October 31st, 2019. What are financial and economic consequences going to be for the UK? Public opinion has changed a lot lately. Theresa May has stepped down from the position of the UK’s Prime Minister and got replaced by Boris Johnson on 24th July. He promised that Brexit is going to be executed by 1st November with or without a deal with the European Union. Labour party demands another vote, as their members don’t think that leaving the EU would be a good idea at this moment.

Great Britain would no longer have the tariff-free trade status with other European countries if they decide to leave without a deal. This would have a significant increase in exports cost and automatically make the UK goods more expensive in Europe and potentially weaker the British Pound.

The prices to import goods to the UK would be higher, which also means some of them would simply reconsider distribution to Britain.

The same thing would happen with European merchants. The prices to import goods to the UK would be higher, which also means some of them would simply reconsider distribution to Britain. One-third of the food is coming from the European Union, which means inflation and a lower standard of living would be inevitable for UK residents. No deal agreement could also reignite the issues with North Ireland. This country would stay with the UK but there would be a custom border introduced between them and the Republic of Ireland. The last two things we would like to mention as a potential consequence of no-deal exit are rights for EU citizens living in the UK and outstanding bills. In case of an exit like this UK would have to pay $51 billion of debt and find a solution to guarantee rights to EU people within their borders.

Hard Brexit is the second alternative, and it is different in so many ways than the above-mentioned exit. This one would include a trade agreement with the EU; but this would require another re-schedule of the exit, as there is no enough time to negotiate it. Hard Brexit could have serious consequences on London as the financial centre. A lot of companies would stop using it as an English-speaking entry to the European Union economy. Also according to the latest research, more than six thousand people could lose jobs because of this and turn the real estate market into a disaster. There would be hundreds of office buildings in London sitting empty, without anyone to rent them. By comparing housing prices now and two years back, the price has already started to drop drastically. Another significant impact on UK companies would be the inability to place bids on public contracts in any European Union zone. This would take a massive toll on banking as well. Best betting sites experts have publish some odds that show that Hard Brexit deal would also increase costs of mobile phone services and airfares. Could the UK lose Scotland in case of Hard Brexit agreement? Potentially, yes. Scotland might have a bigger advantage of being an EU member, which also means a referendum to leave the United Kingdom. One of the most profitable industries in the UK is online gambling, and this one shouldn’t be affected much by any option.

Brexit and its surrounding political upheaval is of course much to blame. Here Ana Bencic, Founder & CEO of Nexthash, delves into the potential benefits cryptocurrencies could offer in situations like this.

Figures taken on Tuesday 6 August show the pound trading for $1.2176 and €1.1199 respectively. The Brexit-related insecurity has been attributed listed as one of the factors behind the decline in the value of the pound, made worse by weak retail sales in June.

With the decline in the national currency and with Brexit on the horizon, questions are swirling around, about how the UK can maintain its attractiveness to foreign and domestic investors.

Investors who have been taking notice of the unpredictable nature of fiat currency’s’ value in relation to political events, as well as the near-constant rise in the value of several cryptocurrencies, will be looking at what makes cryptocurrency a viable alternative to traditional currency.

With more uncertainty than ever in the market, including the inability to hold above 1.27, the pound, it is clear that the value of pound sterling is predicated on political factors. In stark contrast, cryptocurrencies like Bitcoin and Ethereum appear to be unaffected by political upheaval. The value of Bitcoin has reached peaks of over $9000 and despite price drops, it appears to be gradually increasing in value over time. Investors who are wary of traditional currencies will be attracted to the fact that cryptocurrencies are not created by, or under the direct control of any financial institutions or third-party entities. Blockchain-based cryptocurrencies are decentralized and they use peer-to-peer technology to enable all functions such as currency issuance, transaction processing and verification to be carried out collectively by the network. While this decentralization renders cryptocurrencies free from manipulation or interference by a government or central bank, the flipside is that there is no central authority to ensure that things run smoothly or to back the value of a particular currency.

Additionally, Bitcoin effectively increases efficiencies, adds security to transactions and eliminates traditional methods of fraud. Some economic analysts predict a big change in crypto is forthcoming as institutional money enters the market. Moreover, there is the possibility that crypto will be floated on the Nasdaq, which would further add credibility to blockchain and its uses as an alternative to conventional currencies. Some predict that all that crypto needs is a verified exchange traded fund (ETF). An ETF would make it easier for people to invest in Bitcoin, but there still needs to be the demand to want to invest in crypto, which some say may not automatically be generated with a fund.

Cryptocurrencies are yet to reach their full potential, but this will come with time as traditional investors & traders start to use it more often and several major first-world nations pass legislation in support of cryptocurrency trade and investment. At this point, the crypto market is estimated to be worth $700 billion and the perception is that digital currencies are here for good.

Cryptocurrencies are yet to reach their full potential, but this will come with time as traditional investors & traders start to use it more often and several major first-world nations pass legislation in support of cryptocurrency trade and investment.

Countries with underdeveloped infrastructure and nations experiencing devaluation of their national currency can seize the advantages of cryptocurrencies- for the simple reason they can move money across their country’s borders with far greater ease than traditional currency.

Traders make use of cryptocurrencies as a peer-to-peer payment method, allowing them to send money in much less time than a bank transfer would take and with relatively low transfer fees when transferring funds internationally.

Blockchain based currencies will continue growing in popularity with traders and investors for their unique advantages of confidentiality, immutability, fast transaction times and a lack of external mediators.

Although political events,  such as Brexit can disrupt areas like the fuel economy, the sector as a whole is strong. Why? Simple: because we always need energy.

However, in terms of a general investment strategy, there are times when non-essential commodities can be profitable. For example, since 2009, cryptocurrencies such as Bitcoin have become popular. Although experts will argue from an ideological standpoint that we need cryptos and blockchains, the reality is that they aren’t necessary (i.e. we already have currencies).

Non-essential markets may be essential investments

Of course, that could change as developers find new ways to use blockchain technology to prevent fraud and the like. However, right now, crypto technology remains a niche market. But, even though that’s the case, you can still make a lot of money from investing in Bitcoin, Ethereum and other tokens. The same can be said of other innovative yet non-essential industries. A prime example is gaming. Although it doesn’t fall into the same class as energy or forex, it presents no less value in terms of opportunities if you understand the market.

When you look at gaming as a whole, it’s currently worth an estimated $137.9 billion. According to the Global Games Market Report, 2.3 billion gamers now enjoy a combination of online, console and mobile games. In fact, the latter is the largest entity within the gaming industry, generating $70.3 billion in revenue in 2018. However, when you delve further into the market, an abundance of similar but diverse revenue streams present themselves. For example, online casino operators such as GVC Holdings are now among the largest gaming companies in the world.

With casino sites attracting casual players through welcome bonuses, such as free spins, complete novices are now becoming familiar with Vegas-style gaming online. In fact, such is the variety of promotions out there, third-party sites have become an essential way of directing players to the best spots. By reviewing the latest free spin offers and, more importantly, explaining the terms and conditions, review sites have made casino gaming more attractive and accessible to novices. Put simply, these sites, as well as the operators, have turned online casino gaming into a $45 billion+ entity.

Investing in gaming isn’t a game

Alongside gaming operators such as Amaya, which completed a $4.4 billion takeover of PokerStars back in 2014, video game companies have been flexing their muscles in recent years. Perhaps one of the best-known developers is Electronic Arts (EA). Boasting a share price of $95+ in August 2019, this gaming company saw revenue top $5.15 billion in 2018 for a net income of $1.04 billion. Helping to bolster EA’s balance sheet is a list of acquisitions that stretches back to 1987. Starting with Batteries Included and moving into the present day with takeover of mobile developer Industrial Toys, EA has been one of the industry’s most active players.

However, it’s not just EA making moves. Everywhere you look in gaming, something big is happening. With virtual reality (VR) and augmented reality (AR) starting to evolve, the market looks set for another rush of activity. For any savvy investor, this has to be worth considering. Even though games are, in essence, ephemeral, it seems their appeal isn’t. While the likes of Activision or Ubisoft might not form the foundations of your portfolio, they certainly have their place. Indeed, if you’re considering entering the investment game, gaming could be an ideal market.

Dealing with risk is a part of running any business, but CFOs can plan ahead to minimise any impact. When it comes to Brexit, they need to start planning for potential outcomes as soon as possible to be on the front foot. Simon Bittlestone, CEO of financial analytics firm Metapraxis, shares his tips on how to prepare for what’s to come post Brexit.

 Synonymous with uncertainty

Brexit is throwing up so many unanswered questions - will Britain stay in the customs union? Will EU workers be allowed to stay in their UK-based jobs? How will leaving the EU impact profitability? C-suite executives, especially CFOs, are responsible for paving the way for a smooth transition and mitigating any potential negative impacts on the business effectively.

To do that, they need confidence in their decisions more than ever, and this is where technology can step in. Risk-taking will always come as part of the job description for business leaders and nothing can replace the instinct of an experienced leadership team. But amongst such high levels of uncertainty, and when negotiations with Brussels take a different turn every week, technology can help instil confidence that instinct is leading to the best strategic decisions.

Brexit or no Brexit, financial planning starts with target setting.

Planning pitfalls

Brexit or no Brexit, financial planning starts with target setting. Historically, businesses identify and outline their overall goals for the year in line with the business objectives. Keeping these targets realistic is vital for success, and doing so means understanding the importance of historical data. If the board can see performance trends within the context of the market, there is a far better chance of setting achievable goals from the start. Additionally, building a better picture of the company means management teams can understand all the business nuances and can better mitigate risk from the outset.

For finance to achieve data-driven success, it needs to overcome its greatest foible: Microsoft Excel. Though it can be customised to some extent, the tool cannot accurately reflect the complexity of an organisation with scale and agility and leaves the business vulnerable to human spreadsheet errors. It’s time to take advantage of financial analytics. Political and socio-economic factors are making markets more uncertain, so CFOs need to be far more agile when it comes to financial planning. The ability to run quick ‘what-if’ scenarios and see the potential impact of them is invaluable, and it’s just not possible with Excel.

Practical and proactive

With so many uncontrollable factors in the mix, companies need to retain an element of flexibility in their business planning. It’s no longer sustainable, or indeed sensible, to run a one-off annual planning session that cannot be tweaked throughout the year, as different factors come into play. If businesses want to keep achieving their set goals, they need to identify potential future uncertainties, risks and changes now, and be able to react to them on an ongoing basis.

It’s no longer sustainable, or indeed sensible, to run a one-off annual planning session that cannot be tweaked throughout the year, as different factors come into play.

Financial analytics can map all the key performance drivers across the business and build up a comprehensive picture of the history of the organisation, including how performance is affected by certain external events. In doing so, the business can effectively undergo scenario modelling – a game-changer when it comes to the endless questions and possibilities associated with Brexit.

Modelling the different possible outcomes of hypothetical situations will allow finance teams to better understand their potential impact. This can be done for both internal structural changes and external events to give invaluable insight to inform better strategic decisions. It’s possible for all this to happen in real-time in the boardroom: saving time, money and increasing chances of success too.

In the past, management teams could afford to be more insular in their approach – there was no need for anything other than internal factors to be taken into account, and planning was entirely focussed on the business’ own financial year. Now, it’s very different. There are so many uncontrollable factors impacting the market and contributing to financial uncertainty. CFOs don’t have to resign themselves to being unable to plan for this, they just need to have the right technology in place. Financial analytics and scenario modelling will allow CFOs to implement rolling plans that can adapt to fluctuations in the market. This agility is the key to weathering the Brexit storm.

The financial crash of 2008 created a huge amount of mistrust toward big banks and FinTech entrepreneurs have taken advantage of that. The disintermediation of banks from areas such as travel money has given rise to a new kind of financial service firm, an area set to carry on this trend. There are some brilliant ideas in FinTech and the problems they solve are widely unrelated to Brexit, meaning that investment is likely to continue to grow.

In much the same way as FinTech came from the financial crash, existing sectors will be disrupted, and new ones created to tackle problems that arise. Many FinTech innovations were born from a lack of trust of banks and traditional sources of financial services. Since 2008, over 200 FinTech companies have been founded in the UK alone, with seven of these going on to reach a billion-dollar valuation or a ‘Unicorn’ status.

Unicorns refer to start-ups that have reached what many perceive to be the holy grail of a $1billion valuation. In terms of producing these companies, the UK is the third best place in the world behind only the US and China. In 2018, 13 companies reached this valuation in the UK, bringing the total number to 72. Many of these companies are FinTechs born of the financial crash. It seems likely that in a few years’ time we may be discussing an even greater number of companies reaching this milestone with a contribution from new and growing sectors.

With Brexit, there are going to be more problems to solve, and entrepreneurs are going to come along and innovate.

The first sector that looks set to benefit is regulation and regulation technology. With Brexit, there are going to be more problems to solve, and entrepreneurs are going to come along and innovate. Everything will get more complicated with import and export, say, and some smart man or woman will come along and solve it. RegTech has already been impacted – perhaps indirectly – by the financial crash, as an increased amount of regulation and legislation led to the birth of many innovative solutions to keep financial services at such a high pace.

Since this time, it is clear to see the rise of this sector within financial services, with over 300 companies working with Financial Services firms in a variety of sectors. Each of these dealing with a specific problem that is ever evolving and often becoming more complex.

Regulatory Reporting is one such example, it enables automated data distribution and regulatory reporting through big data analytics, real-time reporting and the cloud. Many financial organisations have expressed frustration with the high level of redundancy, dependence on manual processes, and opacity of their regulatory reporting processes. This is a critical activity for financial institutions and without tech solutions would require a concerted effort from a range of departments including, risk, finance, and IT.

Risk Management detects compliance and regulatory risks, assesses risk exposure and anticipates future threats. There are over 45 companies specialising in this already and with so much uncharted territory around leaving the EU, this looks to be a potentially important field in the next few years. One of the most important things businesses can do is to properly understand and calculate risk, take too few and growth will stall, take too many and you may be overexposed.

Compliance is the largest RegTech sector with a large scope and responsibility.

Identity Management & Control facilitates counterparty due diligence and Know Your Customer (KYC) procedures. Alongside Anti Money Laundering (AML) and anti-fraud screening and detection. Identity management is the second biggest sector in terms of the number of firms and is hugely important in a wide range of ways especially when growing and taking on new customers and clients.

Compliance pertains to real-time monitoring and tracking of the current state of compliance and upcoming regulations. Compliance is the largest RegTech sector with a large scope and responsibility. Companies from this sector are charged with meeting key regulatory objectives to protect investors and ensure that markets are fair, efficient and transparent. They also seek to reduce system risk and financial crime. As regulations change when we do leave the EU, this will likely be one of the key sectors to face some of the challenges that arise.

Transaction Monitoring provides solutions for real-time transaction monitoring and auditing. It also includes leveraging the benefits of distributed ledger through Blockchain technology and cryptocurrency. Even apart from Brexit, cryptocurrency and Blockchain tech looks to be a sector of huge growth in the next few years, regulating that in the context of traditional financial service providers will be of significant importance.

For all of these sectors, it is likely that changes to legislation and procedures after Brexit will have a profound effect on what is required by firms in order to stay compliant, potentially creating a huge number of problems that will have to be dealt with in one way or another.

You just have to reverse engineer all the problems that are going to be thrown up by Brexit and then you’ve got investment opportunities. Here’s a problem, let’s find an opportunity.

Wherever’s there’s huge problems and disasters, there’s always going to be an entrepreneur who comes along and will find a solution. From my perspective, that’s exciting because these new crunch points provide opportunity and employment. I set up IW Capital in a recession after a stock market crash, and WeSwap was set up because the market was falling to pieces. What actually happened was the birth of the FinTech sector. Opportunity comes out of a crisis.

The comments come ahead of the recent TV debate between Boris Johnson and his rivals to be the next leader of the Conservative party and British Prime Minister.

Mr Johnson has been publicly open about a no-deal Brexit, which has weighed heavily on the pound.

The deVere CEO’s observation also comes at a time as Bitcoin, the world’s largest cryptocurrency, hit a 13-month price high on Sunday above $9,300, with predictions of the next crypto bull run making headlines.  Bitcoin prices have soared more than 200 per cent over the last several months.

Mr Green comments: “It looks almost certain that Boris Johnson will be Britain’s next Prime Minister.  His vow to leave the EU in October — deal or no-deal — has prompted a decline in the value of the pound.  

“Sterling has lost almost 5% of its value against the US dollar since the start of May.  Similarly, it continues six straight weeks of falls against the euro.

“As Mr Johnson’s campaign moves up a gear – as it moves into the next phase to win over the party’s grassroots – we can expect him to also up his hard Brexit rhetoric and this will likely drive sterling even lower.”

He continues: “We are already seeing that UK and international investors in UK assets are responding to the Brexit-fuelled uncertainties by considering removing their wealth from the UK.

“One such way that many are looking to diversify their portfolios and hedge against legitimate risks posed by Brexit is by investing in crypto assets, such as Bitcoin.

“Crypto assets are often used around the world as alternatives to mitigate geopolitical threats to investment portfolios.”

He goes on to add: “The no-deal Brexit issue might be the catalyst for new investors in this way, but they are likely, too, to be aware that many established indicators and analysts are pointing towards a currently new crypto bull run. 

“As such, they might think this is now the time to jump into cryptocurrencies - which are almost universally regarded as the future of money.”

In May this year, deVere carried out a global survey that found that more than two-thirds of HNWs - classified in this context as having more than £1m (or equivalent) in investable assets - will be invested in cryptocurrencies in the next three years.

The poll found that 68% of participants are now already invested in or will make investments in cryptocurrencies before the end of 2022.

Of the survey’s findings, Nigel Green commented at the time: “Crypto is to money what Amazon was to retail.  Those surveyed clearly will not want to be the last one on the boat.”

The deVere CEO concludes: “As Boris and Brexit continue to dominate the agenda, Bitcoin and the wider cryptocurrency sector could experience a boost as investors seek to protect – and build – their wealth by hedging against the geopolitical risks they pose.”

(Source: deVere Group)

The UK has long been a top destination for investors, having received over £4.5bn of investment into technology companies within the last 3 years. However, with Brexit on the horizon, there is a discussion about how the UK can maintain its attractiveness to foreign and domestic investors after leaving the European Union.

Ana Bencic, Founder and CEO of NextHash, comments on how UK-based, high-growth companies can maintain their appeal to investors in a post-Brexit Britain:

"It is clear that in the UK currently, there is no slowdown in appetite for the investment opportunities that exist, especially in the fast-growing tech sector, but there are questions about whether this will continue after Britain has left the European Union. The UK's abundance of high-growth businesses, particularly those in the technology sector including FinTech, require vital growth finance in the next five years and with the current funding gap, how will these businesses thrive in post-Brexit Britain?

“Blockchain investment platforms can help make global growth finance for scaling technology businesses more transparent and easier to access. Both individual and institutional traders will be able to engage more with blockchain technology-backed trading, where the businesses are backed by a Digital Security Offering and there is greater potential to make rapid returns on their investments than the traditional venture capital route. When this is adopted into the mainstream, it will revolutionise the way businesses will access scale-up finance, how investors will access these companies, and how illiquid shares can be traded into liquid capital in ways never imagined before. As Britain prepares for Brexit, new forms of investment could be crucial for these scaling businesses as well as global investors who want to maintain access to the UK marketplace."

(Source: NextHash)

Here Jamie Johnson, CEO and Co-founder at FJP Investment, discusses with Finance Monthly the real impact of Brexit on the UK property market.

While it may seem like the country has ground to a standstill as the political standoff in Westminster continues, we cannot let this overshadow the activity and trends underpinning many of the UK’s leading sectors.

The property sector is a case in point – domestic and foreign investment continues to pour into the market, increasing house prices grow and in turn producing attractive investment opportunities. Recent research suggests that property investors also stand undeterred despite Brexit uncertainty –almost half (45%) of property investors have expanded their property portfolio since the EU referendum, whereas only 7% said they had sold one or more homes as a direct result of Brexit.

To understand why the UK continues to be a prime property hotspot despite the current state of political affairs, it can be valuable to reflect on how the sector has fared over the last two and a half years. This including understanding the key trends that have played a central role in shaping the real estate market.

Strong regional growth

In times of uncertainty or transitions, commentators like to take a keen interest into how different sectors are performing in London. As a cosmopolitan hub renowned for its residential and commercial real estate opportunities, the capital has faced some challenges. Since the EU referendum, house prices have largely stagnated, and in some postcodes even fallen.

However, focusing on primarily on London risks overlooking the progress taking place in regional markets. Indeed, national house prices have actually been on an upwards trajectory in recent months, driven largely by strong growth in places like the Midlands and North of England.

Birmingham (up 16%), Manchester and Leicester (both up 15%) have experienced the fastest rates of house price growth since the June 2016 referendum, followed by Nottingham (14%), Leeds (12%), Liverpool and Sheffield (both 11%). In real terms, this means that the average property in Birmingham now stands at £163,400, while the average house in Manchester costs around £168,000. For an investor, this attractive capital growth few assets can match.

So, what are the underlying reasons for these strong performances? Much of it comes down to large-scale regeneration projects which are reviving infrastructure, construction and transport links. Some of the construction works include the redevelopment of land close to new stations that are being created for High Speed 2 (HS2).

Property as an attractive asset class

Significant public and private investment is undoubtedly bolstering the sector, yet another important trend to note is the volume of property transactions taking place even at the height of Brexit uncertainty.

In January of this year – just weeks from the original Brexit deadline, and without a clear vision of what the UK’s transition from the EU would entail in practical terms – the number of transactions on residential properties with a value of £40,000 or greater was 101,170, or 1.3% more than a year prior.

This is testament to the underlying popularity of property as an asset class able to deliver long-term returns, and weather political and economic transitions. In fact, recent research revealed that Brexit hasn’t dampened investor sentiments towards property; the survey of over 500 property investors revealed that 39% plan to increase the size of their property portfolio in 2019, regardless of the ongoing negotiations.

Challenges facing the market

Notwithstanding the obvious challenges facing the UK – namely, setting out a clear direction for the future of the country outside of the EU – there are some pressing national priorities that also deserve attention.

Perhaps most important of all is the housing crisis. At present, there are simply not enough affordable and accessible houses on the market to meet growing demand. And while the government has set targets to address this issue, there is an overwhelming fear that these goals will ultimately fail to materialise.

Last year, Prime Minster Theresa May committed the government to delivering 300,000 new homes a year by the mid-2020s. Although a positive step in the right direction, the current pace of progress suggests that construction efforts will fall short of reaching this target.

Figures released by the housing ministry in March 2019 showed that building work began on 40,580 homes in England during the final quarter of 2018. This is down 8% on the previous three months. Further to this, a National Audit Office report recently concluded that half of councils are expected to miss house building targets.

While Brexit has largely taken priority over important issues, the Government cannot put off committing the necessary time and resources towards rebalancing housing supply and demand. Creative reforms are needed, and debt investment projects, such as off-plan property investments, are but one of the many solutions that could promote the construction of new-build properties.

Despite the current obstacles facing the property market, UK real estate has proven itself to be a resilient asset class even in times of hardship. Bricks and mortar remains a popular destination for domestic and international investment, and looking beyond the more immediate challenges lying on the horizon, it is important to recognise the resilience of property as a leading and desirable asset class.

This is the warning from Nigel Green, the Founder and CEO of deVere Group. Mr Green says: “The actual process of leaving the EU itself is now increasingly irrelevant.  Indeed, even if the UK didn’t leave, unprecedented damage to the UK’s financial services industry has already been done.

“Following years of uncertainty and a lack of firm leadership from all parties, firms across the sector have had to take precautionary action to safeguard their interests. 

“Typically, this involves relocating parts of their business or key staff to places like Paris, Luxembourg, Dublin, Frankfurt and Amsterdam, or setting up legal entities in the EU.  Sometimes this has been done publicly, but a lot has, so far, not been disclosed, so we still can’t know the full scale of the situation.”

He continues: “With no meaningful access to the EU’s single market, the UK’s financial services sector is bracing itself for what is likely to be a long and steady decline, ultimately losing its coveted ranking as the world’s top financial centre.

“The lack of confidence in the UK’s financial services sector, which contributes around 6.5 per cent to the country’s GDP, will inevitably hit jobs and the government’s tax base.”

The deVere CEO concludes: “The steady drain of investment, talent and activity away from UK financial services might be able to be stopped, the situation might be recoverable, but confidence needs rebuilding fast.”

(Source: deVere Group)

One sector at the forefront of this disruption is FinTech, in which firms enjoy cost bases lower than those of traditional banks and freedom from the restraints of branch networks and legacy IT systems. As such, they can provide faster services and more innovative products, thereby revolutionising systems and processes, says Rosanna Woods, Managing Director of Drooms UK.

Digitisation will be a priority for firms

FinTech trends have disrupted the industry for over a decade now, and I believe this is the year challenger banks will become prime targets for investors. Large FinTech firms – and traditional financial companies – will also be more likely to get involved in the M&A space as digitisation remains a major driver for deal-making.

In terms of funding, 2018 marked the best-performing year for UK FinTech M&A (US$457.8 billion), which shows that investors are still hunting for the next big FinTech investment. And although Brexit has brought a lot of uncertainty, it could also mean that investors have a lot of dry powder.

Prime examples of challenger banks gaining momentum include Monzo’s crowdfunding exercise and Revolut’s increasing user signups to its finance app that facilitates both worldwide currency and cryptocurrency.

In the digital payments space, we have already seen the roll-out of digital payment methods, particularly via mobile, allowing consumers to make payments at a single tap of a card or mobile device. As banks continue to seek technologies to speed up customer service, they will look to FinTech companies to integrate with their own systems and enhance customers’ experiences.

In terms of funding, 2018 marked the best-performing year for UK FinTech M&A (US$457.8 billion).

Core drivers for M&A

In many ways, growth in FinTech innovation and M&A transactions each contribute to their own success. Businesses and investors are both attracted to opportunities that technology could bring in the industry, and its potential to automate services. This leads to several M&A transactions taking place for geographical expansion and technological innovation.

But will Brexit impact or slow down the developments of financial technologies in the sector? In my opinion, only moderately, if at all. In fact, Blackstone’s acquisition of Thomson Reuters (US$17 billion) last year shows that transaction values increased due to businesses continuously embracing innovation in digital banking, payments, and financial data services.

Although Brexit may have some impact on investors’ confidence in the UK, it is possible that they are simply biding their time. It is common for investors to practice caution when investing in foreign markets. But despite the transactional and regulatory uncertainty we currently face in the UK, I suspect that investors will see the growth in the FinTech space as opportunities to invest in emerging technologies.

Technology’s broader influence

Technology is not just the focus for investment, it is also helping the investment process too. In particular, it has paved the way to making the due diligence process for M&A more efficient and secure. The creation and utilisation of virtual data rooms to help solve the problems faced by dealmakers and investors has been embraced by the industry as good investments.

From a technology provider point of view, artificial intelligence, machine learning, and analytics have digitised the screening process of deals and greatly reduced the time undertaken for due diligence, as well as improving workflow. This is also true for many other sectors such as real estate, legal, life sciences, and energy.

As such, it makes sense to predict more investment in technology that will help the digital transformation of businesses, as demonstrated by Siemens’ investment in software companies in 2007, which generated US$4.6 billion in 2016.

Although Brexit may have some impact on investors’ confidence in the UK, it is possible that they are simply biding their time.

The heightened desire of investors to acquire businesses for digital transformation remains – as previously mentioned - one of the core drivers for M&A. Although Brexit may eventually present unexpected challenges to the FinTech sector, it will continue to thrive. This belief is supported by a report by Reed Smith that stated 31% of financial organisations plan to invest over US$500 million in the FinTech sector this year.

Opportunities amid uncertainties

Taking stock of the aftermath left by the EU referendum, Brexit has undoubtedly created lingering uncertainties and ever-present threats to deal making. But the overall value of UK M&A activities between 2017 and 2018 shows that Brexit did not prevent UK M&A from performing. In fact, over 140 M&A transactions in Q1 2018 were FinTech deals.

This was due to many factors, such as the strong relationship between UK and US investors, as well as the pound’s devaluation after the EU referendum, which made cross-border deals more attractive for global investors and particularly those deals involving businesses specialising in RegTech and digital payments.

Although the on-going Brexit negotiations are not going well and that a no-deal Brexit, despite not being ideal, is still a real possibility, recent history suggests that the FinTech M&A sector will not be as heavily affected as it might seem. The signs indicate that investors will continue to pursue new technologies that can help make business operations more efficient.

Going forward

What concerns businesses and investors in the UK is the fear that London may lose its crown as a FinTech hub. They will be looking for a Brexit deal that replicates the passporting rights the City currently enjoys and would also allow the UK economy to grow by about 1.75% by 2023 (as firms continue to trade in the City).

Moving forward, the difficulties Brexit presents are not insurmountable for the FinTech sector. It will continue to grow and disrupt the industry – whether the UK leaves the EU with a deal or not – and although it is wise to make contingency plans, businesses should avoid making drastic decisions. The FinTech sector is here to stay and it is well-equipped to withstand the many challenges ahead.