Immediately after British voters endorsed an exit from the EU on 23rd June, investors cleared $2.1 trillion from the S&P Global Broad Market Index (BMI) in just 24 hours. Now that the dust has mostly settled for post-Brexit volatility, Patrick Artus, chief economist for Natixis, has analysed the hysterical market reaction for Institutional Investor’s Unconventional Wisdom column.
For Artus, this global reaction was gratuitous as he believes Brexit will remain a British crisis. Indeed, any investment flows diverted from the UK will benefit other economies – particularly the eurozone – with minimal repercussions for global trade.
Meanwhile, fears that Brexit could trigger a domino effect similar to 2008’s sub-prime market crash negate the markedly different economic conditions that the Bank of England can exploit in 2016 in order to prevent another financial crisis. In this respect, Artus believes Brexit does not have the venom to paralyse the global economy – meaning any international investors wary of the Brexit’s implications for their non-UK assets ought to adopt a “business as usual” attitude.
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