Disbelief, chaos as traders grapple with Brexit vote

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SYDNEY: Disbelief and shock hit financial trading rooms on Friday as Britain voted to leave the European Union in a decision that sparked upheaval across Asian markets.

Share markets in the region spiraled into the red after early forecasts during morning trade that Britons would choose to stay in the grouping gave way to results pointing towards an exit.

“We all read the same information, we all watch the same screens and clearly the betting companies didn’t have this one,” Westpac bank’s global FX strategy head Robert Rennie told Agence France-Presse of the result, which saw the Australian market dive almost four percent at one point.

“The polls didn’t have this one and much of the economic and strategy community, including myself to be fair, didn’t have this one as well. “So I think this (mood) is one of disbelief that this could happen right here, right now.”


In Tokyo, Yosuke Hosokawa, who heads Sumitomo Mitsui Trust Bank’s currency sales team, said he had not seen “such a chaos in a while” as the British pound plummeted in response to the result.

Tokyo’s Nikkei index nosedived almost eight percent while the yen jumped as traders rushed into safe-haven currencies.

“Players can’t help but selling the (pound) until authorities say stop it, meaning intervention. All the markets shrank.

“The focus is now moving to the aftermath of the impact. The market will ask, ‘Is Europe alright?,’ ” Hosokawa told AFP. “This may be the beginning of a collapse of the EU framework. The impact is not small.”

UBS global macro strategist Joakim Tiberg said while markets had considered the impact of Brexit, “deep down inside, I don’t think people actually believed in it.”

“I certainly didn’t believe in it. I’m quite shocked,” he told AFP.

Tiberg said market attention would now turn to the reaction to international leaders and institutions, including in Europe, and central bankers as they enact their contingency plans.

Rennie, a Scotsman who has lived in Australia for 16 years, said the decision was set to cast a long shadow over global markets and economies, but noted negotiations for Britainto leave the union were likely to chart a two-year path.

“(Anti-EU campaigner) Nigel Farage emphasized in his earlier speech that dawn is breaking on a newly independent UK. I don’t think it is,” he said. “A lot of has to happen before that is the case.” AFP

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