The Thursday’s vote in Britain for it to leave or stay the European Union will affect the portfolio of New York investors. Although it already has a blueprint to follow: in recent weeks the price movement of currencies, stocks and bonds have carefully tracked the polls that swayed in the direction of the either the group insisting for a “leave” or “remain” camp result.
Indeed, Wall Street apparently has a fair idea of how most financial assets will react if “Brexit” exit from the E.U or – Britain will vote for it.
Still, the race is still too close to call. And the investors would not recognise which way market will move until they learn which side is a winner.
The Risk-on trade – The “Bremain.”
According to the prediction of Peter Wilson, international fixed income strategist at Wells Fargo Investment Institute, “there would be a boost to risk assets and the large sight of relief” if there is a vote to stay in E.U.
A positive vote will drive a risk-on trade. The economic risks and uncertainty go down — the stocks around the world and Stock Market will go up.
The Risk-off trade
As per the statement of Axel Merk, chief investment officer at Merk Investments, “the market is looking for a trigger, or an excuse, to sell and might get one” if Brexit voters triumph.
In another statement issued by Billionaire investor George Soros, it is forecasted that “British pound could drop 15% to 20%, which is a sharp decline”.
It is not only the British Pound but also U.K based stocks also experience significant decreases, particularly banks and other financial institutions.
Also, commodities and stocks, such as oil, will likely suffer losses, due to the market confusion and uncertainty over the potential consequence a “leave” vote will bring.
