Brexit Knocks Confidence But the Sky Hasn't Fallen
By Mark Gilbert
A month has passed since the U.K. voted to leave the European Union. While that's nowhere near long enough for all of the economic aftershocks of Brexit to fully manifest, the evidence thus far suggests grounds for optimism.
The FTSE 100 Index of the biggest U.K. companies, which dropped 3.15 percent on the day after the referendum, is now almost 6 percent higher. The government's 10-year cost of borrowing in the bond market has dropped to 0.8 percent from almost 1.4 percent right before the vote. Both stocks and bonds are arguably comforted by the prospect of Bank of England rate cuts; but even the pound, crushed from a value of almost $1.50 prior to the results, has stabilized at a bit more than $1.30, and has barely budged in the past four weeks:
At the opposite end of the financial liquidity spectrum is the U.K. real estate market. Here, the picture is a bit more mixed, though still not the disaster it threatened to become as investors raced to pull money out of property funds in the days immediately after the plebiscite.
Helical Bar, a U.K. property company, said on Monday that post-vote activity has been "encouraging" despite "some uncertainty." Swedish construction company Skanska AB said this week that private developers who put investments on ice before the vote are still cautious, but none have canceled ongoing projects. And while Aberdeen Asset Management accepted a 15 percent price cut to sell an Oxford Street building in a fire sale after Brexit forced it to suspend trading in one of its funds, British Land was able to complete a similar transaction on the same street at about the same time but without offering a discount.
more...
http://www.bloomberg.com/view/articles/2016-07-26/brexit-knocks-confidence-but-the-sky-hasn-t-fallen
