Withdrawals from UK equity funds have jumped on fears that Britain will crash out of the EU in October without a deal, with investors pulling more than $4bn since Theresa May announced her decision to step down as Britain's prime minister.
Investors have withdrawn $4.2bn from UK equity funds since late May, according to EPFR, a data provider. Outflows since the Brexit referendum in 2016 have climbed to $29.7bn. Luke Ellis, chief executive of Man Group, the UK-listed hedge fund manager, said investors had put the UK into the "too hard to think about basket", the FT reports.
Heavy outflows returned after it became clear that pro-Brexit Boris Johnson would replace Theresa May as Conservative Party leader and prime minister.
Boris must first resolve Brexit. It will always get in the way until he does"
The prospect of a crash-out departure from the EU has already affected financial markets, with the pound weakening significantly against the dollar and euro in recent weeks. A poll of UK financial services companies, published by accountancy firm EY last week, revealed a third of respondents expect no-deal to be the most likely outcome.
According to the BlackRock Investment Institute, the research and analysis unit run by the US fund manager, the UK now faces a "wider range of outcomes" under a Johnson premiership. These include a no-deal Brexit, a snap election and a second referendum.
Neil Dwane, global strategist at Allianz Global Investors, said the UK stock market was "unloved, under-owned and cheap" and Johnson's positive rhetoric would fail to shift investors' cautious stance.
"Boris must first resolve Brexit. It will always get in the way until he does," said Dwane.
In the latest evidence of the disruption a no-deal exit from the EU would unleash , delays at the border caused by a no-deal Brexit risk making cars and lorries wait two days before crossing, creating a pile-up of around 8,000 vehicles, according to government material leaked to Sky News.
The Department for Transport analysis said that in a worst case scenario, vehicles trying to cross the border with the European Union — including those carrying fresh food and medicine — may have to wait up to two days before doing so due to new border checks, with an average wait of one-and-a-half-days.
This would amount to queues of 8,000 vehicles, the report said.