We’ve had a chance to catch our collective breath now that the whole Brexit thing has calmed down and the world is once again spinning on its axis. Or not.
As the vote in the United Kingdom to leave the European Union has been digested, sort of, by the Brits and the rest of the world, all that has become clear is uncertainty. Consider two of the large local public companies we looked at last week, global real estate services giant CBRE Group Inc. and Aecom Inc., the multinational engineering firm. Both have work in the United Kingdom and both took a hit in the markets the day after the June 23 vote.
Now, with a week of breathing room, things look no better for shares of CBRE. The company, trading at $30 a share before the vote, hovered last week below $24, an 18 percent decline. Aecom, which was off more than 13 percent the day after the vote, rebounded a bit but is still 6.5 percent below its pre-vote level.
Smaller businesses are also in limbo. Half of those responding to our poll about the impact of the Brexit vote said it was too soon to tell what the impact would be on their operations (see below). About 20 percent said they had already felt the fallout, with the balance saying it was of no consequence. It’s not a scientific poll, but it does jibe with the anecdotal information flowing through the business press.
And maybe it’s not all a bad thing.
The Fed indicated it would hold interest rates steady until the uncertainty clears (though a slowdown in domestic hiring also played a role in the decision). And some have suggested that the central banks in the other large economies would use the event to continue broader economic stimulus programs such as infrastructure projects – much like the ones Aecom handles on a global basis.
It also could bode well for cash and bonds.
And while the resulting declines in the euro and pound are not great for exports, European goods – and travel – become, in the short term, more affordable.
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