Tags: Brexit | brexit | markets | investors | britain

'All Hell Is Breaking Loose' on Brexit Vote Few Expected

Image: 'All Hell Is Breaking Loose' on Brexit Vote Few Expected

Friday, 24 Jun 2016 02:09 AM


Chuck Self got into the investment business 36 years ago, but he’s never seen markets like this.

“This kind of thing happens once in a lifetime,” said Self, the chief investment officer of iSectors LLC, an Appleton, Wisconsin-based asset manager. “Most people will be feeling pain.”

As the U.K.’s historic vote to leave the European Union jolted markets around the world, investors responded with a mix of shock, fear and excitement. The pound plunged to its weakest level since 1985, U.S. Treasury yields fell the most in seven years and the yen jumped to an almost two-year high.

“Panic is palpable,” said John Gorman, the Tokyo-based head of U.S. debt trading for Asia and the Pacific at Nomura Holdings Inc., one of the 23 primary dealers that underwrite America’s sovereign bonds.

The referendum’s result came as a surprise to both financial and betting markets, which had been positioning for a “Remain” vote leading up to the poll. Traders from the U.S. to Europe and Asia worked through their nights and early mornings to react to the results, facing thin volumes and big price swings as counts from around the U.K. poured in.

“The market is extremely illiquid, extremely volatile,” Richard Benson, managing director and co-head of portfolio investment in London at Millennium Global Investments, which oversees about $16 billion. “This is a shock.” He came into the office around midnight local time, when Sunderland in northeast England voted 61 percent to leave, a result that triggered the U.K. currency’s downward spiral.

The pound plunged by a record and the euro slid by the most since it was introduced in 1999 as the BBC projected a victory for the "Leave" campaign with most votes counted. South Africa’s rand led losses among currencies of commodity-exporting nations as oil sank to about $47 a barrel and industrial metals slumped. Gold soared as investors piled into haven assets. Futures on the FTSE 100 Index plunged with S&P 500 Index contracts as Asian stocks dropped by the most in 10 months.

“All hell is breaking loose,” said Vishnu Varathan, a senior economist in Singapore at Mizuho Bank Ltd. “The only surefire is you buy yen, you buy U.S. Treasuries, you buy gold, and you sit tight.”

Here’s what other traders, investors and analysts are saying:

Alan Richardson at Samsung Asset Management in Hong Kong

“I’m doing nothing. I’m paralyzed in fear, curled up fingers and toes like in a horror movie.”

Wang Chen at Xufunds Investment Management in Shanghai

“Should the pound tumble, I may consider buying some and planning a trip to the U.K. As China has never had referendums, I’d like to see the whole procedure and how it’s operating as a whole. We haven’t made too much preparation for Brexit as China’s still a semi-closed stock market and what’s happening thousands of miles away from us isn’t going to deliver a direct impact. The indirect way to impact the market may be from the forex market as the yuan may have some devaluation pressure.”

Ang Kok Heng at Phillip Capital in Kuala Lumpur

“Fear is normally easier to profit from than greed. This is what we are seeing today.”

Nicholas Teo, strategist at KGI Fraser Securities in Singapore

“I can’t leave the market alone. This is the event risk of the year. Central banks will probably pump liquidity into the markets given the spike in volatility. The biggest fear among investors is the contagion that a Brexit win will have across Europe.”

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Chuck Self got into the investment business 36 years ago, but he's never seen markets like this. "This kind of thing happens once in a lifetime," said Self, the chief investment officer of iSectors LLC, an Appleton, Wisconsin-based asset manager. "Most people will be...
brexit, markets, investors, britain
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2016-09-24
Friday, 24 Jun 2016 02:09 AM
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