Here’s The 1 Thing To Focus On As The Brexit Happens

The results of the United Kingdom’s European Union referendum has come in.

Brexit, which puts together the words ‘Britain’ and ‘exit,’ has become the popular term that’s used to describe the UK leaving the EU. As it turns out, the votes are for the Brexit to happen and stock markets around the world appear to be reacting to the news by falling.

Stock index futures in the US and UK markets are down sharply. At the time of writing, our own Straits Times Index (SGX: ^STI) in Singapore has declined by around 2.0%.

Price is what you pay, value is what you get

It’s easy for our eyes to be fixed on falling stock prices. But, we might really want our attention to be trained on somewhere else.

Thing is, a falling stock price tells us very little about how a business will be affected by the Brexit. A lower stock price simply means that the price for a share of the business has gone lower – it says nothing about the value of the business itself.

Would the Brexit stop Singaporeans from going to the retail malls in Singapore that are owned by CapitaLand Mall Trust (SGX: C38U)? Would the Brexit stop cars from being inspected at Vicom Limited (SGX: V01)? Would the Brexit stop Singaporeans from using their mobile services that are provided by Singapore Telecommunications Limited (SGX: Z74)?

It’s not to say that all Singapore-listed companies are shielded from the Brexit. But, it’s likely that most of them will continue to chug along as per normal.

What to focus on

As such, it is the business behind the ticker that we want to focus our attention on.

Over time, if a stock’s underlying business continues to do well, there is a good chance that its price will follow. In a previous article, I had showed how Vicom’s shares have risen alongside the growth of its revenue and earnings over time.

In the face of the Brexit, I find the following words to be a useful motto: Keep calm and carry on.

To keep up to date on the latest financial and stock market news and for more investing insights, you can sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Vicom.