KAILUA-KONA — The decision by voters on an island in the Atlantic Ocean could have ramifications for an island halfway around the world.
After the United Kingdom voted in favor of exiting the European Union, financial markets dipped around the globe Friday, and Hawaii residents might not be immune from Brexit’s effects to their investments. But some West Hawaii investors preached patience monitoring how the situation plays out rather than focusing on any drastic shifts in the coming days.
“It will have some short-term impact. I’m not really concerned for the long term,” said Jerry Anderson, owner of Anderson Wealth Planning in Kailua-Kona.
That opinion was echoed by David Uhlmann, financial adviser with Ameriprise Financial Services. Sudden changes and how everyone reacts to them aren’t necessarily indicators of how things are going to be years from now.
“The market doesn’t like surprises,” he said.
The outcome of Thursday’s referendum certainly could be classified as a surprise. So, too, is what’s in store for England now that it decided to leave the EU. That uncertainty amplified the effect to global markets, Uhlmann said.
The EU is an economic and political union that currently includes 28 countries. It eliminated tariffs to encourage trade throughout the region. Nineteen of the countries began using the euro, although the U.K. retained its pound.
People with a heavy international portfolio could see their investments sink, Anderson said, at least temporarily. But American investments are likely to be solid.
“The U.S. really is the bright spot in the world economy right now,” said Uhlmann, citing he and other investment professionals suggest a majority of a portfolio consist of American investments.
Uhlmann views the drop in financial markets as giving up some of the gains made so far this year. It also creates a number of opportunities, he said, as investors might be unloading useful stocks that can be bought at a lower price.
“I think it will provide good opportunities,” Anderson said.
Other countries in the union also have alluded to possibly having exit votes of their own. That could open up some places for American trade. It also might open up a route for some investors to expand their international investments, Anderson added. Much of the response comes down to how much risk an investor is willing to take.
But one thing’s certain — the ripple effect from the U.K.’s vote is being felt here. Uhlmann has been sending out emails and making calls to update his clients as things change.
“I’m definitely going to be making a lot of calls tonight and this weekend,” he said.
If people are concerned, Anderson said they should consult with their financial adviser. They might want to shift money out of Europe, perhaps to the U.S. or Pacific Rim, he said.
“For most investors, especially those with a retirement account, it’s not what happens next week or next month, it’s five or 10 years,” Anderson said.
The referendum is not legally binding, so the British government would need to pass or repeal various laws to get out. The referendum is only the beginning of any exit, Uhlmann said, and it will take several years to complete.
“It’s to the EU’s and U.K.’s benefit to ensure a smooth exit,” he said.
Email Graham Milldrum at gmilldrum@westhawaiitoday.com.
