MENU

Is Macquarie Group Ltd ready for a Brexit disaster?

Shares in Macquarie Group Ltd (ASX: MQG) traded marginally higher at $114.36 today after rumours broke that the investment bank was interested in buying UK equities broker Liberum for around $177 million.

According to reports in the News Corp (ASX: NWS) press Macquarie is looking to bolster its presence in the institutional equities broking space, and has also considered German brokerage Berenberg as another acquisition target because it has the added advantage of not being affected by the potential for the UK to leave the European Union without an alternative free market access deal being agreed.

The prospect of the UK leaving the EU with no Brexit deal must be weighing heavily on the minds of senior Macquarie management right now given its European headquarters is in London. Also, the group has operated there for nearly 30 years with more than 1,400 staff employed.

It reports that it has progressed additional financial services and license applications in Luxembourg and Ireland in response to the Brexit problem, however, its planning is unlikely to have factored in the possibility of the UK not striking a free market access deal of sorts with the EU before the early 2019 final deadline for a deal.

Therefore its share price could be volatile over the next couple of months as a “no Brexit” deal outcome will have negative consequences for its substantial financial services operations based out of the UK.

Brexit aside Macquarie is a strong global business that recently told investors to expect profit growth in the region of 15% for the financial year ending March 31 2019. This after it announced the deal to sell Quadrant Energy for around A$3 billion would go ahead with Macquarie’s share of the proceeds at around 22%.

Over the past year the Macquarie share price has climbed around 14%, which compares favourably to negative returns delivered by the ASX’s domestically focused big banks.

For example in the same period the Commonwealth Bank of Australia (ASX: CBA) share price is down 10%, the Westpac Banking Corp (ASX: WBC) share price is down around 16% and the Australia & New Zealand Banking Group (ASX: ANZ) share price is down around 7%.

NEW! Top 3 Dividend Bets for 2019

With interest rates likely to stay at rock bottom for months (or YEARS) to come, income-minded investors have nowhere to turn... except dividend shares. That’s why The Motley Fool’s top analysts have just prepared a brand-new report, laying out their top 3 dividend bets for 2019.

Hint: These are 3 shares you’ve probably never come across before.

They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”

We think these 3 shares offer solid growth prospects over the next 12 months. The first two currently offer fat, fully franked yields. The last is a surprising REIT offering you the benefits of being a landlord with none of the hassle! You’ll discover all three names and codes in "The Motley Fool’s Top 3 Dividend Shares for 2019."

Even better, your copy is free when you click the link below. Fair warning: This report is brand new and may not be available forever. Click the link below to be among the first investors to get access to this timely, important new research!

The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free copy right now!

Motley Fool contributor Yulia Mosaleva owns shares of Commonwealth Bank of Australia and Macquarie Group Limited. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.