What the Brexit Is Doing to This UK Based Fund Manager

What happened to the Henderson Group share price?

It was only a couple of weeks ago that I wrote about the impact of the then-upcoming Brexit vote on Henderson Group [ASX:HGG]. Henderson Group is an international fund manager based in the UK — listed on both the ASX and London Stock Exchange — overseeing more than £90 billion worth of investments.

At the time of writing that update, the Henderson share price had fallen over 18% in the space of two weeks, based on the uncertainty over the vote.

As polls started trending more strongly in favour of ‘Remain’, though, Henderson’s share price recovered much of those falls. Yet when the surprise ‘Leave’ vote was confirmed, its share price went off a cliff — dropping a massive 30% in just a few days.

Why did Henderson Group shares do this?

The biggest issue for Henderson Group is that nobody, let alone any public official, seems to know how, and when, the exit will take place. Some believe it could be done in just a few months, while others speculate it could take up to 10 years!

For financial services firms in the City of London, this level of uncertainty is not doing them any favours.

The other big problem is the pound. As the currency in which the company generates its revenue, it’s still unknown how much the 10%-plus fall in the pound, since the exit vote, will impact Henderson’s results. And it’s this factor the markets don’t like.

What now for Henderson Group?

Despite the massive bounce in the FTSE from the depths of the post-vote results, shareholders in Henderson won’t be feeling any relief. While the FTSE is now trading higher than where it was immediately prior to the vote, the Henderson Group share price has so far failed to find any traction. It’s just bouncing along sideways after its massive fall.

Until concrete plans are set in place for the exit, investors will be nervous about committing their funds to financial services firms. On top of this is the global challenge for investment managers to generate sufficient returns, and profits, in such a low interest rate world.

Matt Hibbard,
Money Morning

Money Morning Australia