Times are changing
Yes, I will still be investing in UK shares, but I am being selective on what Brexit UK shares to avoid and reduce my portfolio risk.
1. Airline Companies
I am avoiding investing in any UK or EU airlines at all cost. The profit margins are getting squeezed. Many major and low-cost operators are being decommissioned. Online travel companies are extremely competitive and reducing profits for the major airlines. No one buys tickets in advance now as last minute travel bargains can be found easily. Airline companies shares are very volatile to news, scandal and bad rep. One angry passenger videos can easily wipe 5% of airline stock price in a day.
2. Retail Companies
Regardless of cheap stocks from Tesco, Sainsbury, Next, Primark, Car Phone Warehouse; I am not investing in these companies. As a shopper, I am not convinced brick and mortar business will sustain the future growing sales. The Europe and UK populations are not exactly growing like the US, India and China. Online E-commerce for the next decade will dominates consumer spending. My money is safer under my bed with inflation.
3. Local Banks
LLOYDS and RBS are always in the headlines for most viewed and traded shares. This is mainly due to their high potential returns from their 2009 falls and failure. With high growing dividend payout, I am still not convinced with their future returns. Firstly no diversification outside of the UK or EU. Poor transition into future FINTECH technology. Poor online securities hurting their business. UK Brexit shares I am avoiding!
4. Utility Companies
National Grid, United Utilities, SSE and host of major utilities companies are at risk with the rising interest rates. Despite their generous growing dividends, these companies are at high debt. With ageing equipment across the nation, they are required to maintain, upgrade and expensive man hours cost due to the rise of the minimum wage. These companies are not exactly growth companies too. Government and politics seem to have a heavy influence on capping energy prices and mandatory changes despite being public limited companies.
5. House Builders
House price will collapse. Despite all the reports, I am not convince housing market will rocket for the next decade. The house prices in key parts of the UK like London, Manchester and Edinburgh have bubbled well for the last decade since the 2009 crash. Despite a shortage of homes, high-interest rates, growing debt; the new UK generations will not be able to buy brand new houses. The rental market would be the norm for the next decade at least. Housebuilder stocks have great dividends however unreliable payout year after year.