Natasha Prayag
By Natasha Prayag

Hedge your Brexit – looking beyond our borders for stock picks

We may be cutting loose from our friends across the Channel in a matter of weeks, but that does not mean we are cutting ourselves off completely.

In fact, should the Brexit “no-deal” scenario play out as many think it might, looking outside this sceptred isle might be a good idea for investors.

While the UK stock market is one of the biggest in Europe – and indeed the world – and offers a huge range of companies in which to buy stocks (or shares), there are plenty of options on the mainland, too.

Germany, for example, has the DAX index (or GER30). It is like the FTSE index we use in the UK but tracks 30 major companies rather than a hundred.

As with investing in companies listed in the UK it is important to understand what you are considering buying and why. But don’t worry that you won’t have heard of any companies based in Europe – within the DAX, even the most insular Brit will know Adidas, BMW and Continental (tyres).

France also has a good range of companies in which to buy shares that many Brits will know.

L’Oréal, Michelin and Renault are listed on La Bourse (the French stock exchange) and feature on the CAC 40 (or FRA40) list of major companies.

Your capital is at risk.

In Italy, you have a range of flashy and exciting options, including Moncler, Fiat Chrysler and even Salvatore Ferragamo, to choose for your investment portfolio.

Another important aspect to investing outside the UK is the impact of using a different currency. If a Brit buys a stock that is listed in euros, for example, due to how currencies work, it is technically more expensive than for someone based in the eurozone. This is because sterling has fallen in value since the Brexit vote, meaning we need more of it to buy things priced in many other currencies.

However, should that stock rise and is sold at a profit before sterling rises again, the money returned is “worth” more to someone receiving it sterling than in euros.

So, if we approach a deal, a no deal or even an extension to Article 50, and the FTSE starts jumping around wildly, there are interesting options to consider rather than putting your money away until things have calmed down.

We might not be in a committed relationship with our European neighbours any more – but we can still use their stuff.

Learn more about Brexit and find popular markets here.

Your capital is at risk.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.