Hedge funds are betting on a rebound in UK assets regardless of the outcome of Brexit

A Brexit without a trade deal is becoming more likely, spoke both British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen about this week. But for many investors, even a bad but certain outcome will be favorable, writes the Financial Times.

Due to the multi-year Brexit saga, pound-denominated assets are fundamentally undervalued, according to several hedge fund managers. This is one of the few low-risk investments remaining in the world of soft monetary policy, which practically guarantee high profitability. In a recent letter to clients, Morgan Stanley pointed out that the ratio of funds' bets on the growth of British stocks to bets on the fall is the highest in five years, the FT notes.

Index investments in the British stock market this year are catastrophically inferior in terms of profitability to investments in the S&P 500 and Nasdaq, but investments in the industries most affected by the corona crisis (air travel, hotels and financial sectors) have already justified themselves on positive news about vaccines and vaccination . “And if an agreement is reached, then this is practically a free profit,” Savvas Savuri, chief economist at London-based hedge fund Toscafund, who invested in British commercial real estate, told the publication.

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We talked about the progress of the Brexit negotiations and about what threatens the UK with their failure, here .