UK: Should I Stay or Should I Go?

May 13, 2016 | David Hernandez, CFA, Director of Traditional Manager Search

This week’s chart looks at polling information for the UK Referendum scheduled on June 23rd. On that day voters will decide whether or not to remain in the European Union. Taking inspiration from last year’s “Grexit”, the market has appropriately named this potential event as the “Brexit.” The chart shows a Bloomberg composite indicator which takes an average of polling data from several surveys. The most recent results report 41% in favor of remaining, 40% in favor of leaving, and 19% undecided, suggesting a very close vote. The odds-makers, however, place the chance of the “Brexit” around 35%. In terms of economic consequences, it is hard to predict exactly what would happen should the “Brexit” occur, but in general, investors can expect to see a weaker pound, reduced business investment, and weaker economic growth with some spillover effects to the Eurozone. This is an event worth watching as it will likely have some influence on short-term market performance leading into the summer.