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What would a ‘Brexit’ mean for capital markets?




2 min read

Obviously the most talked about sticking point at the moment for UK issuers and markets alike is how the UK will ultimately vote in the EU referendum. With the majority of investors and issuers sitting on their hands, adopting a ‘wait and see’ approach, activists within the space justify their movements with confidence in their predictions, hedging, or a combination of both.

Meanwhile, the air of uncertainty still fans the menacing flames of the opinion polls. Where last week saw ‘vote leave’ briefly taking the lead last week, the Remain camp has rebounded and is ahead once more, with mere days to go!

So, assuming a majority Remain vote would see the PM continuing as such, no emergency budget from the Chancellor and the UK electorate satisfied that they have ‘had their say’… what would a ‘Brexit’ look like for the capital markets?

There is no doubt that the looming vote has injected an element of uncertainty into UK financial markets, with higher levels of volatility hot on its heels. Saying that, investors in the market are already pricing in some probability of a ‘Brexit’ ahead of a vote. Currency markets rebounded over the weekend as the Remain campaign stole back some momentum, resulting in the sterling being in a stronger position before the weekend.

On SyndicateRoom-specific activity, 3i Infrastructure recently raised £385m from an open offer and placing, exceeding its £350m target, with £230m to be used to fund the completion of investments in Wireless Infrastructure Group and TCR, and the balance going towards new investment. This was a hugely successful deal, as demonstrated by the excessive demand, and it’s been reassuring to see really strong participation from retail investors.

 

Key market catalysts this week:

Tue 21st June – BoE Holds Second Additional ITLR* Operation Around EU Referendum

Thu 23rd June – EU Referendum

Thu 23rd June – EU Manufacturing PMI Data Released

Fri 24th June – US Durable Goods numbers (May Data)

 

Need a refresher on what an ‘ILTR’ operation is? Just click here.


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