What Wall Street wants: A Britain vote to 'remain'
Suffering from “Brexit” fatigue?
Some Wall Street pros say they’re getting worn down by the 24/7 media coverage, not to mention the A-to-Z analysis of what a vote by Britain to leave the European Union might do to the world’s stock markets, the British pound, United Kingdom banks and the nervous system of investors worldwide.
A “Brexit,” or Britain’s exit from the EU, is being viewed as a potentially dark market event, one investors would rather avoid. Since there’s no historical precedent for this type of political and economic event, the fallout and hit to investor confidence is tough to quantify -- but is expected to be potentially sizable.
But one thing is becoming clear as global stock markets have rallied back in recent days amid relief that a “Brexit” might not happen despite all the handwringing: Investors prefer a “remain” vote, or a result that keeps the U.K. in the EU.
When will we know the result of the 'Brexit' vote?
Indeed, a winning "remain" outcome would likely deliver a continued relief rally around the globe and bolster risky assets like stocks.
A vote that goes against this current market bet will likely put a dent in the confidence of investors and hurt risky assets, especially when it’s added to other headwinds, such as economic trouble in China, political uncertainty in the U.S. and military tension around the world.
If there's a vote for a Brexit, it is “difficult to imagine world markets exuding confidence in the months ahead,” Robert Hockett, a Cornell law professor, said in an email.
A close vote either way will also add to the uncertainty, adds David Donabedian, chief investment officer for Atlantic Trust Private Wealth Management.
What markets would love is a resounding, clear-cut "remain" victory: “A margin of victory of four points or more (for the ‘remain’ camp) would be clarifying for markets,” Donabedian predicts.