International Investment / Investing in Europe – What to Think About

Post-Brexit, investing in Europe and internationally has become a very different proposition for UK-based investors using Pound Sterling. Mutual access to financial markets was curtailed after the UK left the European Union. The Trade and Cooperation Agreement contains only a few provisions for financial services. The EU has access to some parts of the UK’s financial markets, but the EU has yet to make similar provisions for the UK. As a result, access to EU financial markets depends on each individual member states’ rules on third-country businesses. As a result, Amsterdam has recently taken over London as Europe’s most prominent and largest share trading location. The UK Government is looking at reforming financial services regulation to promote innovation and new products in order to plug this gap left by EU trading moving away from the City, as well as creating new links with countries like the US, Singapore and Switzerland.

Despite these new barriers, there are still a lot of opportunities within Europe. Investors focussed on things like sustainability will find a lot to like in Europe. All of the top ten best-performing countries on environmental metrics are within the continent and many of the businesses creating new technologies to tackle climate change are based there too, providing rich opportunities for those interested in ESG issues.

There is also an element of currency risk when investing in countries that don’t use Pound Sterling. An additional foreign exchange transaction must be made into the appropriate currency for the
investment at hand. This adds another layer of risk to mitigate, as currency pairs can move over time, meaning that returns can be affected positively or negatively when it comes time to receive dividends or cash out on an investment. Even investing in popular investment vehicles such as index funds like the S&P500 can have different returns in different currencies due to exchange rate fluctuation and any fees incurred by whoever is facilitating foreign investment.

This was a guest post written by Currency UK: Currency UK can help mitigate these costs. By providing an easy-to-use online platform along with a dedicated account manager who can support you in protecting your funds from market movements and put you back in control.

Written by: John Courtney

John is highly ranked in the Top 100 UK Entrepreneurs list by City AM and is winner of the Lifetime Achievement Award from techSPARK. He has been a Board Director himself for over 40 years and first started placing Non-Executive Directors over 25 years ago. John founded and ran six of his own businesses including a Management Consultancy for 10 years, a Corporate Finance offering for 10 years and a mid-sized Digital Agency for another 10 years.