Interim Market Update June 2016: The Brexit
As a Brit who supported the “Remain” campaign, I was disappointed when the votes were in and final ballots counted. The people of Great Britain chose to leave the European Union (“EU”), Prime Minister David Cameron announced his resignation, and much of the world is left in the wake of the vote.
The vote, which was 52% to leave, and 48% to stay, demonstrated the interconnected nature of markets around the world.
As expected, stock markets around the world fell into the negative including Tokyo’s Nikkei down -8% in a single day. The British Pound dropped to its lowest valuation in 30 years and even the Canadian Dollar took a hit sinking below 77 cents.
While markets were down, US & Canadian stocks fared better than many other international markets. Much of what is happening focuses on the Eurozone at the moment.
This is an unprecedented event and nobody knows exactly how the departure will take place. With a country divided and lack of leadership, there is a lot of uncertainty which results in volatility in stock and bond markets around the world. Both the Bank of England and the European Central Bank have stated that they are ready to act to provide liquidity and support. We expect stability to return after there is an agreed upon plan for Brexit.
There is a lot of speculation about what will happen next. Thus, it’s important to fall back on good investor habits; so “Keep Calm and Carry On.” We expect things to normalize and correct.
Remaining invested for the long-term regardless of events like this is the best thing you can do. Trying to time the markets out of fear or panic is how many inexperienced investors lose the most.
As always, if you have questions we’re here to help you out. We will be monitoring closely how Great Britain will separate from the EU and the potential effects on your portfolio.
Neville Joanes – Portfolio Manager
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Neville Joanes is the Portfolio Manager & CCO at WealthBar. Neville oversees portfolio management and investment operations, ensuring that clients’ portfolios meet their objectives. He is dedicated to his goal of always delivering the best investment management to our clients. Neville is also a CFA® charter holder.