Talking Brexit and market volatility

Cardiff Business School’s most recent Executive Education Breakfast Briefing welcomed a selection of guest speakers to discuss Brexit, and its impact on business and financial markets (08 May 2017).

Sponsored by property consultants Bruton Knowles, the briefing considered how businesses could mitigate against the volatility brought about by the Brexit vote and upcoming negotiations. Attendees heard from three speakers: Chris Jenkins, Managing Director of Market Squared (a subsidiary of OSTC); Paul Langley, Managing Director of Godi Financial; and Danny Corrigan from the Financial Services Negotiation Forum.

The UK is facing a number of political and economic challenges and has, since the European Union (EU) referendum result of 2016, faced an extended period of uncertainty. The formal notification of the UK’s intention to leave the EU, with the triggering of Article 50, has resulted in, at times, hostile words between the key players. Coupled with the call for a snap General Election on June 8 2017, it’s unlikely that international financial markets and currency exchange will experience a respite anytime soon.

The speakers individually addressed areas of major concern and uncertainty, reflecting on how this impacts the ability of businesses to manage its finances and plan effectively for future development.

Chris Jenkins, who’s company provides online educational trading applications used in the Business School’s Trading Room, spoke about the knowledge and experience gaps in the financial industries to effectively respond to the challenges of Brexit, and its multi-layered negotiating timetable. He argued that there is a need to improve students’ independent and critical thinking: “Recruitment and training are at the top of our agenda, and we are working with higher educational institutions to grow a more flexible and analytical finance graduate workforce. Our software and applications are designed to enable students to practically apply trading theory and knowledge, develop their own individual trading personality and increase their resilience. It is vital that they aren’t led entirely by textbook learning but can successfully respond to new scenarios and uncertain markets using their skills and tools in an informed and rational way.”

For Paul Langley, uncertainty and ‘sharp movements’ in currency markets was now the ‘new normal’, meaning that companies needed to explore new ways of insulating themselves, or mitigating against, fluctuations. He said: “In the past, currency events tended to be short and sharp. Major incidents happened, currencies moved, then settled. Now, the moves are far more volatile with percentage point swings on a daily basis, and this will remain the case whilst the Brexit negotiations continue. These moves can and will affect companies’ bottom line.

“A recent survey revealed that 80 percent of SMEs haven’t hedged since the Brexit vote or amended their hedging policy in any way. I strongly believe businesses that make FX planning part of their long-term strategy put themselves in a far stronger position compared to those that leave currency matters to the markets. We encourage businesses to protect themselves from the effects of currency fluctuations thereby reducing risk to their underlying businesses.”

Danny Corrigan from the Financial Services Negotiation Forum, who has also worked with the Economists for Brexit (now Economists for Free Trade) group also addressed the assembled audience of more than 80 business leaders and finance associates. He spoke about the potential pitfalls and prospects presented by the upcoming Brexit negotiations, arguing forcefully that while it will be a complex process, there is an opportunity to emerge with a stronger and more resilient UK economy.

The next Breakfast Briefings will take place on Thursday 15 June 2017. David Bowles, Director of Supply Chain for The Royal Mint will deliver a presentation titled: The 2.8 Billion Pound Question: The Trials, Tribulations and Triumphs of the logistics involved in the launch of the new £1 coin. For further information and to register, please visit the University’s event pages.

For those interested in finding out more about the applications used in universities and businesses across the globe from Market Squared please contact Chris Jenkins (chris.jenkins@marketsquared.co.uk).