Cambiar Investors provides insights on the Brexit results. Their commentary can be read in full here.
Britain’s historic vote to leave the European Union has resulted in a vicious shockwave that is rippling through the global financial markets. Given the near-unanimous expectation for the ‘Remain’ vote to emerge victorious, the subsequent adjustment in positions is creating a volatile move across currencies, equities and commodities.
What Just Happened?
- The decision for the UK to leave the European Union triggered a massive risk-off trade across the global markets.
- An unwinding of positions by hedge funds triggers outsized moves to clear the markets.
- Some context is needed –while dramatic in magnitude, today’s decline is essentially an unwind of the market’s gains over the past three days.
- Britain's 1992 decision to opt-out of adopting the Euro as its currency illustrates the long-standing skepticism that this sovereign has harbored toward becoming fully integrated in the European Union.The UK was not one of the “original 6” in the Common Market.
- Brexit is sparking fears of additional referendums in other EU member countries. France's Marine Le Pen, president of the National Front party has called for an immediate referendum there. This kind of talk is destabilizing for markets.
What Will Happen Next?
To find out, download the whole commentary here.
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