Brexit was an event that currency and stock markets had shrugged off and felt confident that ultimately it is not going to happen. The markets were in a rude shock and the toll was evident in heavy losses in currency & stock markets worldwide.
However all is not lost and there are reasons that the events may actually not able to make a dent to most of the markets :
- Markets sharp downturn was to some degree precipitated by significant uptick in the markets on the hope that brexit is not going to happen
- Brexit if it happens is not any way near and may take months or even two years & its effect will fade out by that time or the cope of implementation may change totally from what is perceived at this stage.
- Britain itself faces greater challenges after Brexit and rejection of Brexit by Scotland , London & North Ireland along with significant youth population is likely to make it difficult to implement
- Some Brexit leaders who led the campaign are now developing cloud feet seeing the reality and as currency devolution and resultant inflation stare thenm in= the face
- A bad experience of Britain may dissuade other countries to make such experiments
- The sharp gyrations in the world markets can be attributed to a large extent to hedge funds, traders hitting panic button & liquidation of plus positions. Bankers, investment funds and investors themselves are not going to liquidate any significant portion of their portfolio or change allocation of their portfolios.
- In the past world markets have shown knee jerk reaction to many events from 9/11 terror attack to Lehman brothers crisis but have come out stronger.
- Brexit is also a complex political phenomenon rather than an economic choice due to perceived threat to Europe from radical Islam.
- Not to panic when the market moves wildly is of critical importance to long term investing gains.
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