The last five days have been stressful for Australian fund managers with Britain both voting to withdraw from the European Union and England handing the Wallabies an ignominious series defeat. These two factors have wiped A$42 billion off the market capitalisation of the ASX. Whilst fear and uncertainty have dominated the animal spirits of the market, it is hard to make the case that Brexit is another GFC for Australian equities and indeed that a recession in the United Kingdom will have a dramatic impact on the profits of Australian listed companies. In this week’s piece we are going to look at the actual profits earned by ASX 200 companies in the United Kingdom and the quantum that is actually at risk.
Australian Profits coming from the UK
In 2015, the 200 companies that comprise the ASX 200 delivered a net operating profit after tax of A$104 billion and of this A$2.4 billion, or 2.4% was derived from operations or exports to the UK. To put this in context, the fall in value of the ASX 200 from Friday 24th to Wednesday 29th June was almost 18 times the entire profits earned in the UK by large Australian listed companies last year.
Read more here.