Locals unlikely to suffer ‘Brexit’ plunges
As British voters ushered in the Brexit — a combination of “Britain” and “exit” to signify the United Kingdom’s departure from the European Union Thursday — businesses and investors across the globe braced for financial ramifications.
Following the voting results, which indicated a 52-to-48 percent preference for a “divorce” from the 28-country economic and political bloc, the British pound dropped to its lowest value since 1985 as the Dow plunged 500 points, according to Reuters reports.
The referendum prompted British Prime Minister David Cameron to announce an October resignation.
“The British people have made the very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction,” he said in a Reuters report. “I do not think it would be right for me to be the captain that steers our country to its next destination.”
Eric Weigand, senior portfolio manager at US Bank, told Reuters the vote would foster a dubious investment marking moving forward.
“It was a surprise in the magnitude of the reaction,” Weigand said. “Clearly markets anticipated that there would be greater stability in staying (in the EU). The uncertainty that comes from the leave vote passing and the subsequent stepping down of Prime Minister Cameron certainly increases investor anxiety as we look through the summer.”
Despite the Brexit-related anxieties, Greg Collins, CEO of Collins Wealth Management in Red Wing and Hastings, said his clients, who rarely invest internationally, are unlikely to feel a significant impact.
“The markets here in this country have fallen back to where they were last week, the dollar is back to where it was a week and a half ago,” he said Friday. “Right now, those who have bonds and some of the bond funds are doing very well. They’re way up today.”
International companies, however, may have to proceed cautiously.
“As long as you’re diversified in your bonds and stocks and stay the course, you’ll be OK,” Collins said. “It will be interesting to see how the eng market settles down. They were they only country not to go with the euro, and it doesn’t surprise me that this vote went the way it did. They’ve always hung onto the pound as their standard as opposed to the European Euro.”