Several days after the Brexit, despite unexpected optimism on the stock markets, several prominent observers affirmed that it’s like the calm before the storm. Many analysts were surprised by the fact that the British stock market seemed to better resist than its European counterparts, especially French and German ones. While the London’s FTSE retraced 100% of this post-Brexit fall this morning, the Paris’ CAC and the Frankfurt’s DAX just retraced 50%.
In fact, the British stock market benefited from a strong commitment by the Bank of England (BoE) to rescue the British Pound (GBP) if need is, and financial advisors like Torino-based Maurizio Giuliani told Cyceon that “thanks to Brexit and 2 or 3 years from now, London may finally become an even better destination for financial assets just a few miles offshore continental Europe.” Aside from the UK, this is Europe once again and the global economy as a whole which could be entering an acute area of turbulence.
Global investing guru Mark Mobius said the Brexit vote will hasten the swing of the “center of gravity” to Asia, meaning less business for Europe, and Marc Faber aka Dr. Doom warned that as the global economy might weaken further, investors are still enjoying the ride on the Titanic. However not for long according to George Soros who questioned German Chancellor Angela Merkel’s policies and said Brexit has “unleashed” a financial market crisis especially in the Eurozone which will now be “severely tested.”
So what’s next? Italy is topping the long list of concerns for the European Union (EU). “I continue to be short on the banking sector, especially Italy’s which is the potentially weakest post-Brexit situation,” Giuliani emphasized.