Political risk – New Zealand next?

At Castle Point, we spend most of our research time on individual companies and their industries, but we do keep an eye on macro events to ascertain potential risks lurking in the overall investing environment.

While the Brexit vote in June 2016 certainly surprised, what really stuck in my mind was the aggressive “marketing” tactics of the Leave campaigners, particularly around immigration and the costs of EU membership. One of the most effective Leave campaign messages was the bold claim that instead of sending 350m pounds a week to the EU, it could be retained and be used to fund Britain’s National Health Service.

This was a blatant lie. Although it is difficult to determine its ultimate impact on the vote, given the closeness in the result it is arguable that it could have been the difference. Having travelled to the United Kingdom recently, it does appear that many of those who voted Leave did so on the back of the topics discussed above and believed the campaign slogans without checking the facts.