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Stay, or go? That is the question on the lips of billions around the world on the topic of Brexit – especially with the UK’s June 23 European Union (EU) referendum looming in the weeks ahead, which will determine whether Britain will leave the EU or not.
“The vote outcome is highly uncertain, with global risk assets vulnerable under a British-exit (Brexit) scenario,” says Blackrock’s global chief investment strategist Richard Turnill in a weekly commentary, who views the upcoming referendum as a “major risk for global markets”.
He reiterates last week’s warning of caution to investors, while recommending that investors dial down equity and credit risk for now. “UK investors may want to put in place hedges against a potential Brexit outcome,” he adds.
While BlackRock’s recent analysis has reflected divided opinions on the possibility of a Brexit, one thing is for certain: the economic ramifications, whichever the case, will not be easy.
These are the implications according to Turnill, be it Brexit or Bremain:
Following Fed Chair Janet Yellen’s comments on Monday, market expectations for a central bank rate increase have plunged.
This week, Turnill recommends looking out for any signs of further stabilisation in China’s foreign exchange reserves, and whether European countries’ production data show similar improvement to that seen in recent surveys.
This article first appeared in The Edge Singapore Market Report.