The impending exist of the U.K. from the European Union and subsequent drop in the value of the pound is something that many see as a crisis and rightly so – but where some see crisis, others see opportunities. For instance, take Formuepleje, Denmark’s largest independent asset management firm.
The $7.4 billion fund (50 billion krone) plans to reduce their investment in Danish mortgage bonds with long maturities and seek shares in exporters based in the U.K. The fund has already done quite well with these bonds, but based on its expectation of gradually improving markets after the Brexit smoke clears, Formuepleje sees the silver lining in the pound’s plummet.
The fund is currently looking for assets which present the chance to benefit from the current weakness of the pound, which hit its lowest level in over 30 years last week in the wake of several U.K. property funds folding. For the Danish fund, the real opportunities lie in U.K. companies whose business models are largely based on the overseas market, especially those whose exports account for 75% or higher of their business. The pound’s depreciation will undeniably cause plenty of short term pain, but in the long run, funds like Formuepleje see that the turmoil will ultimately contribute to earnings and spur increased competition which could benefit Europe as a whole.