Recognising opportunity in times of economic uncertainty

While political uncertainty is a concern for all, Brexit and other issues do not mean the end of fruitful investment opportunities.

These are challenging times for investors. Uncertainty around the Brexit process in the UK, as well as nervousness in the US market, has exacerbated the challenges in the global economy.

At the same time, such conditions are encouraging investors and business leaders to refrain from taking “risks” when it comes to new business ventures.

However, market uncertainty can also bring about great opportunities, and some forward-thinking investors are exploring key areas where they can improve their returns.

Recent economic growth reports from the British Chambers of Commerce have predicted that 2019 will see growth of just 1.2%, making it the lowest level in a decade.

Similarly, the BCC also predicts that business investment in the UK is set to decline by 1% in 2019 – making it the worst year since the financial crash of 2008.

It is no coincidence that these worrying estimations correspond to the uncertainty surrounding Brexit. And, regardless of how often these predictions change with every new Brexit update, the truth is that political uncertainty has clearly had a demoralising effect on both business owners and economic experts.

According to a recent poll, CEOs in the US have said that they are less optimistic about business goals for a fourth quarter in a row – a concerning sentiment at what is traditionally a peak time of profitability in the US.

Meanwhile, consumer confidence in the US has dipped for the fourth time in five months and all analyst predictions for March were missed. Recent data has even produced signs of a forthcoming recession, with weaknesses in housing and retail.

It has been made clear that growth in China will be lower this year as a result of trade tensions. While China won’t be as badly affected as Western economies, the country is expected to have slower growth in consumer spending and a tighter hold on global liquidity.

However, despite the considerable uncertainty surrounding both the UK and US economies, it must be mentioned that uncertainty brings some fantastic opportunities for investors.

In a nutshell, investors should look towards diversifying their wealth globally and seek value-focused funds. This involves investing in unfashionable stocks that have previously seen significant growth, but that are not as popular as some of the higher growth stocks.

Emerging markets have been known to capitalise on and profit from political uncertainty, and investors should take advantage of markets that have not been given attention in the past.

Rather than invest in random stocks, investors ought to seek professional advice and research the market, as well as the state of the economy, before making a well-informed investment decision.

To assist in further mitigating risk, investors could also look towards new technologies that can provide them with a consolidated picture of their overall portfolio in real time.

Such tech will ensure that the independent market-price reporting process is objective and accurate, ultimately assisting in smarter decision-making, and even recognising potential issues before they have gained a foothold.

The risk that comes with investment into “untapped” markets almost always correlates to a larger potential return. Therefore, uncertain times do not have to spell misfortune for all.

Providing investors seek assistance from professionals who have an understanding of the history of the economy and potential impact of investment decisions, there is no reason why they should not associate economic uncertainty with opportunity.

Wael Al-Nahedh is chief executive officer at Spearvest.

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