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  • UK voters narrowly decide to leave the EU
  • UK Prime Minister Cameron announces his resignation

Changes in selected stock indices and commodities:

Note: USA: S&P 500, Europe: BE 500 inx, Japan: Nikkei 225, Brazil: Ibovespa, Russia: RTS, India: NIFTY, China: Shanghai Composite, Africa + Middle East: EMEA, South Africa: JSE TOP 40, Australia: ASX 300, Gold and Oil


The decision by British voters to leave the European Union after more than forty years has caused an earthquake in financial, currency and commodity markets. Equity markets reacted to the referendum result with significant losses as investors quickly sought safer assets. Indeed, the result of the British referendum was largely a surprise. In the weeks leading up to the vote, investors had been rather cautious, but a few days before the referendum itself, polls had predicted a rather positive result in terms of Britain remaining in the EU. Hedge funds reflected this optimism in their portfolios and equity markets made solid gains ahead of the referendum. However, everything changed dramatically in the immediate aftermath of the referendum: stock markets fell sharply, the price of oil fell in the short term and the value of the British pound against the dollar fell to its lowest level since 1985. Gold reacted positively to the referendum result, moving up sharply above the USD 1,300/oz level.

British Prime Minister David Cameron, a supporter of the UK staying in the European Union, came under a lot of pressure with the referendum result, to which he responded by announcing his resignation. In addition, British and European politicians will soon have to negotiate many issues related to Brexit, as this unprecedented move has no contractual treatment and the relationship between Britain and the EU (and other countries with which Britain has had treaties through the EU) will have to be redefined and adjusted accordingly.

A closer look at Brexit:

72% of eligible voters took the opportunity to vote in the referendum. The referendum result was very close, with 52% voting to leave the EU and the remaining 48% voting to remain. The infographic also shows in which areas which voters had an advantage. The precincts where the vote to leave the EU won are shown in red and the precincts where the vote to remain won are shown in blue. The north of the UK was strongly in favour of staying in the EU, and so the referendum result has reinvigorated efforts to separate Scotland, for example, from the rest of the UK.

A very interesting analytical perspective is the division of voters into groups by age. The younger the voters, the more inclined they are to favour staying in the EU and vice versa. One could almost speak of an intergenerational clash. Some commentators have expressed the view that older people in particular perceive the negative effects of globalisation and would like to see it stopped.

The following graph also documents the division of the British public. It shows who the supporters of staying in the EU and Brexit believe or do not believe. In blue is the confidence of Brexit supporters, in red those who voted to remain. It shows that Brexit supporters are very disappointed and do not trust anyone (politicians, journalists, businessmen, or celebrities).

Brexit on its own would not deserve the attention the financial markets are giving it, but Britain’s departure from the EU is not an isolated event and needs to be seen in a wider context. This is the political situation across Europe. Indeed, similar sentiments and similarly strong divisions in society now prevail in many European countries. The migration crisis, the consequences of the financial crisis and the lack of a vision for the future direction of the EU are shaking European stability. This could, of course, also have economic consequences in the form of market closures and lower levels of cooperation, which would have a negative impact on the performance of the European economy. The last graph illustrates the dissatisfaction with EU economic policy, which could lead to further referendums with similar results.

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