The referendum for UK (Britain) to exit out of the European Union (EU) is set for June 23, 2016.
The global markets are already in panic mode.
UK is a pillar in Europe, EU and the global markets.
The promoters of Britain exiting out of the EU use excuses such as Britain kept its pound and was doing okay before joining the EU. Reasons which are understandable.
The only problem with such an argument is that the world has come to respect the EU and Britain’s presence in the EU.
Britain is a global hub for investors. No matter what one invests in, the $FTSE (London Stock Exchange Index) remains key to most of the analysis that investors use for moving or depositing their money.
London is also a hub for major currency trading. As a matter of fact, many professional investors have already given hints of which currency pairs to trade. Dump the pound and buy the other ones it trades against.
Not only the above but Britain is also a centre for commodity trading. You will also remember that every time the London Heathrow airport gets closed, many people lose money because London is a hub for air freight as well.
This week alone, we learned that Bill Gates does not think his money will work well if Britain exits the EU.
Switzerland is withdrawing their application to join the EU. The Swiss Franc is very stable and strong so why would they want to join the EU in such a time of uncertainty?
For a fact, the Britons are an arrogant bunch and they have every right to be arrogant since they are on GMT. However, the EU has Britain and Germany as the key pillars (no offence to France or the other countries).
The implications of Britain leaving the EU are immense for USA (United States of America), Asia (think Japan and China) as well as African countries which should pay attention.
It is not only about forex and indexed funds. Most commodities like Gold, Copper, Silver, Uranium, Coffee, Cotton, etc. are bench marked on the London Stock Exchange. This is very crucial for African countries. Sure, oil is bench marked on the US markets but that information gets fed into Europe before North American markets open up.
The next few weeks will be wild for investors. If you blink, you will lose. As a matter of fact, it might be better to take out 50% of your investments which use the $FTSE and watch how the other 50% will perform.
It would not be prudent to jump on the band wagon now and buy or sell short. Staying on the sidelines would be much more prudent. Avoid irrational exuberance.
Martha Leah Nangalama
The author has an IT and business background as well as past trading experience.