How Is Brexit Impacting Market Liquidity

The video discusses market liquidity issues, focusing on the UK property market and its broader implications. It highlights the illiquidity of property assets compared to equities and the limited capital available to keep markets open. Concerns about high yield debt and market spreads are raised. The discussion also covers the impact of Brexit on property funds, suggesting a potential 5% asset value downgrade to reflect increased risk. The video emphasizes understanding the balance of supply and demand without altering underlying fundamentals.

What is the primary reason property is the first signpost of liquidity issues?

• Property is globally fungible.

• Property has high demand.

• Property is wholly illiquid.

• Property is easily tradeable.

How does the liquidity of property compare to that of equities?

• Property requires a slower selling process.

• Equities are less fungible than property.

• Property is more liquid than equities.

• Equities are unique and non-tradeable.

What concern is raised about high yield debt?

• It will have no impact on markets.

• Spreads may narrow.

• Liquidity may shrink.

• It may become more liquid.

What is the suggested response for property funds in the wake of Brexit?

• Maintain current asset values.

• Increase asset values by 5%.

• Double the asset values.

• Downgrade asset values by 5%.

What does the 5% asset value downgrade reflect?

• The expectation that risk must be compensated.

• A change in rental value.

• An increase in future demand.

• A decrease in supply.