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Comment by dawson | Hacker News Reader

It didn't, Brexit made it 7% more expensive for SoftBank https://twitter.com/jamestitcomb/status/754966707769315333

Man, this is so confusing.

I just read an article that claims the opposite, ie that Brexit made it 30% _cheaper_ for Softbank, due to Yen vs Pound exchange rate.

"Brexit Made ARM Holdings A Bargain For Softbank"

http://www.forbes.com/sites/parmyolson/2016/07/18/arm-softba...

How?

ARMs income is mostly in dollars, and their expenses mostly in pounds.

Accordingly if you look at the FTSE100 index, it's moved up about as much as the pound has dropped because a lot of the companies on it will profit from a weaker pound, while if you look at the FTSE250, which includes a large number of companies with income predominantly in pounds, it's down.

Wouldn't every company that could afford a part-time CFO be hedging currency exposure?

A lot of the FTSE-250 companies seeing dropping share prices are companies that are based in the UK, and making most of their income in the UK. While some of them probably could (and some I'm sure have) hedge against increased prices from foreign suppliers, for most of the the big problem is expected problems with domestic demand.

Some certainly faces currency risks too, but then the question is how much are you willing to spend to hedge?

It's highly unlikely most companies have sufficient earnings that they could have afforded to hedge against movements of this magnitude for anything but a short period. Certainly they can - and I'm sure some have - reduce the impact and give themselves time to adapt, but the cost of hedging against the effects of movements of this size and effects potentially lasting years would be prohibitive for almost anyone.

Say you work at Arm, and are thinking of buying an apartment. The London market has a lot of people from Asia doing investments. If the pound weakens against the yuan, tough luck. Or perhaps you were thinking of buying an imported car or having a vacation in Europe... those job postings at Intel, AMD or IBM start to look a lot better than before.

ARM's head office isn't in London, but Cambridge. Even so, foreign investors drive up the purchase prices, true, but not that much as when they drive up the prices, they drive down the profit potential as well as drive down (or reduce the growth of) rental prices which makes it costlier to leverage.

I do agree with you the entire Brexit situation makes it tempting to look elsewhere, though. Personally I do consulting, and I've started looking for US remote devops consulting gigs in preference to UK ones because it's suddenly a lot more attractive to get paid in dollars...

Perhaps the fall in the GBP was offset by rises in their stock price coming from speculation that companies with large amounts of GBP-denominated exports would sell more? Total guess

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