Weekly Thoughts 02 September 2016

Many clients and people have wondered and asked about the impact that Brexit will or might have to their investments and the global or regional economy in general. If the UK stock market ‘drops’, it means the average value of all the listed companies drops, not necessarily that every underlying company in the UK is suddenly not making profits anymore. The concern for one country’s stock market often overrides the fact that good companies earn money from many countries making up the global village, not just the country it is listed in. So about six weeks on now, how have some company faired since the event? I have some figures for five UK-listed companies:

• Vodafone: It generates 84% of its revenue outside of the UK, operates in 76 countries and is up 5% in pound terms since Brexit.
• British American Tobacco: 97% of revenue from outside the UK, operates in more than 180 countries, 13% up in pound terms.
• Reckitt Benckiser (They market a whole bunch of health related products and all of us reading this will have at least one of them in our house): 92% of revenue from outside the UK, 180+ countries, 7% up since Brexit.
• GlaxoSmithKline (also global healthcare): 95% of revenue from outside, 150+ countries, 18% up.
• Diageo (a global alcohol business): 95% of revenue from outside, 180+ countries, 18% up.

Many good companies have also been around for a very long time and weathered all sorts of economic and political events. For example, Nestlé has been in business for over 150 years and Johnson & Johnson and Coca-Cola both for around 130 years. Good consumer companies will last and will make profits.