Brexit - The Stock Market Fallout

24th Jun '16 by Edward Croft

97 comments 36488 reads

After a week of grief for Jo Cox, the odds of a Brexit were priced at less than 14% likely as polling closed. But we all woke to the stunning news that Britain has voted to leave the European Union. Unless you’ve been on a completely different planet you’ll know that the pound and major stock market indices tanked - though after some very brutal early losses they have partially recovered. Many household name shares have been hammered, especially in banking, property and travel companies and the reality is dawning that the UK is highly likely to break up. We thought we’d gather some of the key market reaction and comment here.

Markets at 10.30am

UK indices have fallen, though not as hard as their European colleagues. Most UK indices are down 5% but the German DAX -6.2% and the French CAC -7.8% have fallen harder - stocks across the broader European indices are down 6.5%. Markets are moving fast and Central Bank intervention may occur at any time - but here’s a brief picture:

Market	Value	Change
FTSE 100	6028	-4.9%
FTSE All Share	3298	-5.3%
FTSEurofirst 300	1271	-6.5%
GBP/USD	138.8	-6.6%
GBP/EUR	124.9	-4.3%

Dealing chaos for private investors

Share trading volumes are off the scale this morning. Hargreaves Lansdowne had reportedly tripled dealing staff to help customers deal today but it clearly isn’t enough. Their systems have completely seized up with customers unable to enter or execute trades for long periods of the morning. Similar issues were reported by all the brokers with a flurry of apologetic tweets - most blaming the market for the slow dealing. We do wish that they’d take responsibility for their own systems.

Comments from the Bank of England

Given precipitous falls in the banking sector (see below), Mark Carney, the Governor of the Bank of England, came out with a statement that “The Bank will not hesitate to take additional measures as required as markets adjust and the UK economy moves forward”. Carney further stated that the stress testing of banks has ensured that they are positioned to survive situations far worse than those we currently face…

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Meldrew

24th Jun '16

I cannot believe that Wales voted to leave because the Welsh economy is the most fragile and is the most likely to take the biggest hit in comparison to its size.

It is the young who are most likely to suffer the most because they still have their lives ahead of them but they were outvoted by older voters who, arguably, have less to lose from leaving.

It'll be interesting if both Scotland and Northern Ireland leave the UK because they are two of the three kingdoms. It will leave England and Wales together and they could hardly justify being called the United Kingdom since Wales is a Principality.. Their union could not really be called Britain either because they would only be a part of the Islands. Nor could they be called England because Wales would not accept that.

There is a similar problem with the flag. The Union Flag would have to go. It would not be appropriate to replace it with the the Cross of St George because he is not the patron saint of Wales.

A new name and a new flag would have to be created. The strong UK brand would be lost. That could impact on international recognition and trade.

If the new country were to be called England and the Cross of St George were its flag, it might not take long for Wales to take the hint and have its own independence referendum.

All in all, I think Brexit is going to prove to be a disaster for the UK.

GgOil

My portfolio is down 17% this year. I might as well have burnt my cash

ACounsell

This tirade is not worthy of a response as you assume many things about me which are far from the truth. I wish you luck in your brave new world and perhaps we should return to investment discussions on this web site in future.

Calalily

Just my humble thoughts. The UK voted democratically to leave the EU. The rest of the world still exists and the U.K. will still engage with the world including Europe.
We will have trade deals as we did prior to the EU with NAFTA and EFTA (now EEA). The EU countries need to trade with us, that's why there is already talks of different types of deals that could be put on the table.
We will still travel the world and remember people were buying holiday homes in Europe long before the EU came along.
Its Ok for the SNP to say they want a ref for Scotland but given that other EU countries are calling for their own referendum, a quick decision there would be foolish. She was always going to want another ref no matter what.
When I hear young people blaming the old, its because of the older generation that we are here and able to do this. When the UK had a vote to join the common market they were voting for a trade agreement, not voting to hand over piece meal the rules and regulations of the U.K. to another Union, do you hear us shout we were robbed?
Talks are already planned for Monday, the EU want to avoid unnecessary to disruption to trade. The Tusk comment 'what doesn't kill you makes you stronger' works both ways.
I see that already experts, PM, BOE etc are saying, actually we said it would be really bad but actually it's not that bad and you won't be at the back of the queue and we do need the UK.

Sorry it's long winded.

gus 1065

25th Jun '16

Excellent thread here. It will become a document of historic interest to future generations. Minor point Ed, but when you mentioned the respected investor Neil Woodford, as a sage and wise investor in all things good and wholesome, were you referring to the same Neil Woodford skewered by very own own Paul Scott in the attached link?

http://www.stockopedia.com/content/small-cap-value-report-21-jun-2016-cir-botb-pvcs-137039/?comment=28#28

Couldn't resist a spot of mischief for posterity.

One other thought. I wonder how much of today's slightly less than apocalyptic fall and subsequent claw back in markets is a result of a. systems breaking down making it hard to sell, and b. Investors who "sold in May" and are coming back into the market for bargains? For various reasons I took 20% of my portfolio into cash in May and have seen stats that suggest this has been quite a trend among both PIs and professionals doing the same. Are we seeing a dead cat bounce caused by temporary factors with another lurch down over the next few weeks? Personally, I am keeping some powder dry pending further disruption.

Best,

Gus.

Rusty2

I think one reason for the bounce is some large companies a large proportion of their revenue is in $s, therefore with the fall in the £ their profits should increase, I'm thinking of oil and companies like Carnival (LON:CCL). Also on opening prices were maked down so much, many 20% that buyers came in for bargains. It was hard to sell seemed like an hour delay. So yes its partly systems and partly market makers. Where we go next week I'm not sure but I think it could be a bumpy ride and I expect some further falls. I have about 30% cash, will invest when dust settles or I see opportunities.

Some of that about the South East is true, I agree its too densely populated, I used to live in it, however about doctors and hospitals I have found its not better outside the South East, in some ways its worse. Doctors yes there are more per person but appointments are still the same and I always seem to have to wait longer in reception, last 2 times were over 30 mins late and there is no one else waiting. As for hospital, I don't think its any better and its over 20 miles away now. All the small hospitals in this area have or are closing down. So I don't think its better outside the SE from my experience. How is Brexit going to solve this problem apart from jobs going in London?

Fangorn

This comment is under review

Murakami

We welcome vigorous debate but, however much you may disagree with what is written, we expect all contributors to treat each other with mutual respect. Please play the ball (topic), not the person - the site rules are set out here: http://help.stockopedia.com/knowledgebase/articles/219816-what-are-the-posting-guidelines - and any further violations on this thread will lead to moderation.

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One thing I have not seen mentioned is why did the bookies get it so wrong? This time the polls were more correct.

jonthetourist

26th Jun '16

We have also had a polite request from Paul to dial down the bombast which has rather been ignored. Since we are playing on his pitch I think it would be polite (British even?) to play by his rules.

Unfortunately it is often the case that the most bombastic are blissfully ignorant of their "shouty" style.

Jon

cig

27th Jun '16

The bookies just balance the bets punters place. And I guess the punters, who come from a group who still has spare cash and time for political betting, probably missed the scale of the class divide at play here (as most of us did!).

Mechanical Bull

"Some of us have grown up in various parts of the Commonwealth, have lived & worked in other parts of the Commonwealth, and are disgusted at the deceit of Ted Heath who dishonestly turned his back on said allies in favour of those whom we have histortically been enemeies of since 1100-1200's."

Mate - I was born in New Zealand. You don't speak for me.

Never said I did :)

Was merely stating that Remaienrs trying to paint Brexiteers as "Little Englanders" when we want to re engage with the rest of the world was disingenuous at best. Many of us are Internationalists with close links to Commonwealth for example...

ridavies

I would have been a Remain voter if I had had the chance. I live in the Isle of Man - met my wife to be in UK and came to join her over here and stayed. Don't think by the way that things are cushy over here - we really are a low tax low service economy! So with the background, and as a significant PI potential loser (if I tried to sell), here is my take on some of the statistics form the election which I find illuminating.
1. The vote was based on a simple majority, yet if the Commons want to take the decision in the future to have an election before the end of the fixed term, they need a 2/3 majority. Which is the more important decision - the referendum or the early election. Yes, I do think that there should have been more than a simple majority
vote to Leave - say 60:40?.
2. There was apparently a 20% postal vote and there seems to be a view that tht was strongly in favour of Leave partly because of the grey vote strength in the postal vote, and partly because the Leave campaign was in full swing when the postal vote would have been made - 10 days to 2 weeks before. The other thing about the postal vote is that it is open to abuse. There are certain sections of the UK community where the opinion of the elders holds sway; sign here and I will deliver the votes! Need I say more. In my view, our democracy depends on a single vote, secret vote, held at a polling station. the postal vote should be very carefully allocated by the powers that be so that only those who really cannot make it on the day to the polling station should be allowed one, and it should be collected by an official. The postal vote should not ever be a convenience. We are talking about a potential 6-7 million votes here, and the majority to leave was 1m+!!!!
3.Any statistics are open to interpretation. In Scotland, the turnout was LOWER than the national average at 69%; and was much lower than the 80+% turnout for the referendum on independence. In the largest city Glasgow the turnout was a pathetic 56%. Didn't put much effort into getting your voters out, Chief Minister, did you. Yet you described Scotland's vote for Remain as 'overwhelming' I think you could have said it was comprehensive since there was a positive vote for Remain in all Scottish areas. However, another way of looking at the figures of 62:38 of voters for Remain and 69% turnout is that less that 44% of those able to vote in Scotland actually voted for Remain. Not so flattering is it, Ms Sturgeon and questionable whether it justifies your sabre rattling. In fact right up until the last 10 days of the campaign, there was clearly some doubt in the Scottish voters' minds as to whether voting Leave was better for another independence referendum. Ms Sturgeon had to come in quickly and said, No, vote Remain if I remember correctly.
4.In N Ireland, the claims by Sinn Fein for a vote for a combined Ireland is even weaker. 56:44 vote on a 63% turnout, which means that only 35% of the potential electorate voted for Remain. Not exactly convincing, is it?
5.Same sort of comment in Wales but for the other side, Leave. 53:47 on a 72% turnout. That means that 62% of the potential voters did not vote for Leave.
6. England and Overall. England 53:47 Leave on a 74% turnout. 61% of the potential voters did not vote for Leave. Overall, very similar 51.9:48.1 for Leave on a 72% turnout. Nearly 63% of potential voters did not vote for Leave.o
These last figures are of course the most important. Only 37% of registered voters voted to Leave, probably the most momentous decision in our modern history. We are not talking about votes in Parliament here, where we can throw the party in power and individual MPs out after 5 years. This is long term, very long term, and the Leave proponents don't have a strategy to talk of, just something - something very important - we want to get away from; EU dominance of our parliamentary and legal system.....which leads me back to where I come from. I said I would have been for Remain, but it wasn't easy because I share the views in my heart with the Brexiteers in so many ways.
6.Oh and by the way, I am and have always been a supporter of compulsory voting, as in Australia, where they also apply a system of immigration which the Leave group was touting in the campaign. That way - compulsory voting - it would have taken away all the arguments about uncertainty I have been boring you with in the last few paras. I believe the absence of it and the low % of the electorate support for Leave in any part of the UK should still justify another referendum at some stage which demands a significant majority for a move away from the status quo, (i.e. Remain) on this hugely important subject.
I also have no sympathy for those who say they are 'voted out'. In Scotland it was quoted the other night that they have been to the polls 4 times in 2 years. Really? What a heavy weight to bear! Must take about half an hour to vote. How long to shop each week; go out for a meal; go to the pub? Which is the more important? Unfortunately, Far too many of us feel that 'we don't do p[politics' yet almost all of us do! We complain about our politicians, our laws, their decisions etc all the time. Politics is an important part of life. I hoped that the Scottish referendum indicated that there really was a popular interest in politics. Unfortunately, my excitement was short-lived.
7. I save the last point for Labour. Either Mr Corbyn was playing a canny game - primary target, break the Tories, or he didn't appreciate the seriousness of the situation. Give him the benefit of the doubt and say the former. At least it was a strategy. Unfortunately, although the Tory split set up the potential Leave victory, Labour sealed it with a lack lustre campaign among their supporters, and the aforementioned Ms Sturgeon and the SNP who didn't put so much energy into it as into the independence referendum, helped it along....not forgetting the potentially undemocratic postal vote. Oh dear, dear, dear!

muckshifter

29th Jun '16

Since the result, I believe that many voters who voted on the back of years of negativity by most of the British press concerning Europe, with confirmation bias preventing them from really taking any notice of the warnings of the remain campaign in the face of what I believe was irresponsible bluster about "scare campaigns", have now seen far more realistic assessments of the future from both sides.

In those circumstances, with the announcement before 8am on Monday of the first 5000 bank jobs moving from London into the EU, and numerous other indications of problems to come, it hasn't surprised me to hear quite a few people saying that they regret their "protest vote".

My hope is that, however unlikely it might seem, one of the senior remain cabinet ministers, such as Theresa May or George Osborne would stand for the leadership of the Tory party on the basis of calling a parliamentary vote for a confirmatory referendum. Probably unlikely to succeed given the party's long felt antagonism towards Europe, but you never know!

Muck,

Which 5000 jobs were these?

"EU referendum result: Big banks fail to repeat threat to move jobs out of UK in event of Brexit"

hTTp://www.independent.co.uk/news/business/news/eu...

This was last I saw

What was announced on Monday 27th June?

Are you talking iof the Morgan Stanley news, that was subsequently rescinded and denied by MS itself?

Contrast the fearmongering and threats of EU (our supposed friends with whom we have shared an alliance with for 40 years) to the Kiwi news.....thats true friendship.

Brtiain's future is with the Commonwealth, CanZuk and Nafta - not the declining EU

"New Zealand offers UK its top trade negotiators for post-Brexit deals"

hTTp://www.telegraph.co.uk/business/2016/06/29/new...

When you're in a tight spot you find out who your true freinds are...it isn't the EU that's for sure - this despite how shabbily we treaed NZ in 1973.

Countries queuing up to do trade deals with UK now it seems, from US!!! (Back of queue???), Canada, South korea, Ghana, OZ. etc etc

janebolacha

Excellent debate this evening in "The Moral Maze" on BBC Radio 4 on the EU Referendum:

http://www.bbc.co.uk/programmes/b07hgh5f#play

The episode a week ago, on the eve of the referendum, was also very good:

http://www.bbc.co.uk/programmes/b07gg1q3

James RH

ridavies,

Completely agree that any statistics are open to interpretation and of course, any statistic can be made to fit an argument.

However, what is undisputable is that on a 72% turnout, 28% of the electorate failed to register a vote and so those 28% can have no complaints about the result. Of the 46 million or so entitled to vote, 72% took that democratic choice and effectively decided for the 13 million who didn't want to/couldn't be bothered.

What I can't agree with though is compulsory voting as surely that takes away democracy? In this referendum, there were three choices - remain, leave or abstain. The fact 13 million chose not to vote was still their democratic choice however surely with the caveat that they shouldn't then have the right to moan if the result didn't go the way they really wanted.

One could argue that maybe the 28% were nonchalant which way the result went and were happy for the other 72% to decide.

Just a thought.

Brexit - the stock market fallout

Markets at 10.30am

Dealing chaos for private investors

Comments from the Bank of England

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Edward Croft

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