$3 trillion out of the blue: the stock market has calculated losses from Brexit
The world's stock markets lost a record $3 trillion in two trading days after the results of the UK referendum on leaving the European Union. The plebiscite provoked a sales rush on the world's leading trading platforms.
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The British Financial Times writes about this with reference to market participants.
Stock analysts note that on the first day of trading, the collapse on trading floors was due to the sale of short positions on which investors wanted to make money, since the majority was confident that British residents would vote to keep the country in the European Union. The shock result led to a record sell-off of short positions, which triggered the frenzied crash. The second trading day after the referendum – Friday – had a completely different trading logic. Investors were reconsidering their attitude towards long-term investments and getting rid of potentially risky assets.
“The bottom line is that only some of the investors were counting on the vote that we ended up getting,” said Nicholas Colas, chief strategist at Convergex.
The world index S&P Global Broad Market index (BMI) fell by 6,9% in two days, which became an anti-record since November 2008 – the global financial crisis, which was provoked by the collapse of the mortgage market in the United States. About $1 trillion was withdrawn from the S&P 500 trading floor. In general, about $2,8 trillion was withdrawn from developed markets over these days, while only $179 billion was withdrawn from emerging markets. Analysts note that investors cannot yet predict stabilization, since there is a very high level of uncertainty in connection with the referendum.
“Investors need stability in at least several metrics: the British pound, the euro and stocks,” said Nicholas Colas.
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