Brexit and Foreign Investment
Prime Minister David Cameron’s futile attempt to appease the Euro sceptic wing of the Conservative party has ended in calamity. A year after winning a surprise second term as the UK’s Prime Minister he has been unceremoniously dumped. In the parlance of politics he resigned in order to spend time with his family. Which he will do, I understand, by going on a speaking tour at £150,000 per hour. You can’t make this stuff up. But there are lessons to be learned. Lessons involving arrogance, incompetence, carelessness, lack of preparation and on and on.
The UK, either the 5th or 6th largest economy in the world (they seem to swap places with France monthly) is , according to new Prime Minister Theresa May, going to exercise its option to leave the European Union, and formally announce that intention, by exercising something called clause 50, and will do so no later than March of 2017. The exercise of clause 50 will formally begin the process of leaving the Union. How long it will take to actually leave is anyone’s guess. The Europeans are saying there is a two year deadline, but that is extremely optimistic. UK law and EU law have become deeply entwined over forty years. The divorce will certainly take more than two. Someone once said, “Chaos is an opportunity”. Well, whoever said that, here is your chance. Fearing that the European Union has the upper hand in the negotiations to come, market traders have driven the Pound Sterling down over 30 percent.
Strategics and financials interested in acquiring UK assets in digital marketing, enterprise software and technology services now find themselves in the enviable position of buying on weakness at tremendous discounts. In our view, the opportunity to by strong companies at significant discounts is compelling. We cannot, however, recommend paying David Cameron £150,000 to deliver a speech, even if he recites Shakespeare.
Pound weakness is already peaking the interest of Chinese technology leaders Baidu, Alibaba and Tenement . These technology giants have led the way as Chinese firms spent a combined 64 billion dollars on mergers and acquisitions in the last 18 months. The top Chinese firms have brought their deal teams in house as they ramp up for 2017. UK companies specializing in enterprise software, cloud computing, data integration and digital marketing will benefit and be sort after as potential partners.
November 22 2016