Brexit is a victory for uncertainty across international financial markets and the volatility we are currently seeing is only just the beginning, Nigel Green, founder and CEO of deVere Group, has warned.
Prime Minister David Cameron has appealed to the markets for calm following the British public's decision to leave the EU.
Green said: “Britain is filing for divorce from the EU – it’s a shock event. The Brexit victory is a victory for uncertainty across international financial markets. Brexit-triggered volatility is now only just beginning; we can expect it to potentially last up to two years.
“Due the far-reaching impact of this vote, Brexit will inevitably affect the British and the European economies and the wider global financial markets. The decision may have been taken in the UK but it will impact the rest of the world too.
“Investors around the world on Friday will pile into safety and prompt a significant shift in global markets from risky assets to safe havens.
“The world’s currencies, equities and bonds are now on magical mystery tour - at least in the short-term.
“For instance, the FTSE will tumble, the pound is already in freefall, and investors will be gearing up for probable shifts in the Swiss Franc, to the price of gold, and to monetary policies globally.”
He continued: “There is likely to be two years of varying degrees of market volatility because of the plethora of unknowns. At this stage there are still question marks hanging over so many different areas.
“Will there be a second Scottish independence referendum? How far will Brexit fuel the imagination and resolve of Eurosceptics in other EU countries and how will this manifest itself? And how long will it take the UK to hammer our new trading deals? These are just some of the big questions that will need to be answered in the new Brexit era.
“What we do know, however, is that disentangling Britain’s 43 years of EU membership will not be an easy process. The UK will remain part of the EU until it invokes Article 50 of the Lisbon Treaty, which has a two-year deadline to work out an exit.”
The deVere CEO goes on to say: “Although the impact of Britain leaving the EU will create huge short-term uncertainty across global markets, this is not be the start of an Armageddon-style scenario. The world as we know it will not stop.
“Indeed, there will be key buying opportunities for investors who will use this volatility created by markets overreacting as a time to go bargain-hunting.
“They will, understandably, be seeking high quality equities, amongst other assets, that have become cheaper so that they might top up their portfolios and/or take advantage of lower entry points, which means greater potential returns.
“In these times of increased volatility, more than ever a good fund manager will prove to be invaluable to help capitalise on the enormous opportunities that will be coming along and help to sidestep the risks.
“History teaches us that it is always best to be in the markets, rather than out. Whilst markets can be unpredictable in the shorter-term, in the longer-term we can be more certain of their trend: they go up. As such, sensible investors will be proactive and be taking advantage of the new era to bolster their wealth.”
deVere Group is one of the world’s largest independent financial advisory organisations.
