June 30th, 2016
So UK voters decided to leave the EU.
Uncertainties over the implications of this decision triggered an important deterioration of risk sentiment and market conditions.
In the two days following the vote, the Sterling lost an impressive 12%, down from 1.49 to 1.33. European equities declined more than 10%, with peripheral down more than 15%, and banks lost more than 20%. US markets unsurprisingly outperformed, down “only” 5% to 6%, comforting us with our current overweight in the region. Credit spreads widened but probably more due to worsened liquidity. Safe haven such as core rates, the USD, the JPY, the CHF and gold rallied strongly.
Looking ahead, a lot will depend on the reaction of European authorities. Not only because of the economic negotiations that will have to take place with the UK in the months ahead, but also regarding the inevitable change in economic, fiscal and social policies that need to be undertaken in the region.
What a challenge, but what an opportunity!
Please find attached our complete analysis: AlphaSwiss Partners Market Update June2016