While it might be too early to assess the full impact of Britain’s decision to eventually leave the European Union sometime in the future, there are now tentative signs that British economy will be severely hit in the short-term.
Business confidence in the UK plunged off a cliff following the Brexit referendum result. The Brexit induced turmoil has led to heightened concerns that business investment and the property market are poised for the doldrums.
In a sign that the ripple effects are also started to hit the property market, Standard Life Investments suspended trading in its £2.9 billion UK property fund yesterday.
In a statement, Standard Life noted that the decision was taken “following an increase in redemption requests as a result of uncertainty for the U.K. commercial real estate market.”
Investors are reportedly pulling funds as analysts warn that London property values could fall by as much as 20% within three years of the country leaving the EU.
An estimated £25 billion is invested in UK property funds, and during May individual investors withdrew £360 million.
The withdrawals have largely been as a result of uncertainty for the U.K. commercial real estate market.
The Brexit vote might have also wiped U$165 billion off of the market capitalisation of the largest US and European banks, according to a study by the New York University. But then again, who cares for experts.
This morning Asian trading session halted a five-day rally as jitters gripped investors despite hopes of additional stimulus by central banks to offset likely downturns triggered by Brexit.
With trade volumes thin in Asia this morning, as financial and commodities markets in the US were closed for 4th of July, investors decided to take same profits.
Fears of an impending crisis in Italian banks will likely see the JSE in the red for most of today, snapping a five-day winning streak.
Italian Prime Minister Matteo Renzi hinted that the country might defy EU rules and pump public money into its banks, send shares in Italian banks. Riddled with debt, tumbling by 3.7%.
The rand strengthened yesterday and was on track to recoup most of its losses following the Brexit.
The rand climbed to 14.4600 against the dollar before pulling back earlier this month, to close 14.5660 to the greenback.
The rand has strengthened after the June 23 Brexit vote triggered a rush from riskier assets, partly buoyed by expectations low for longer rates.