Shock and horror for markets and traders

As more Leave votes came in after Asian markets opened on June 24, the pound slid further.
As more Leave votes came in after Asian markets opened on June 24, the pound slid further. PHOTO: REUTERS

As currency traders trooped into their offices for an extra early start to their work day yesterday, to monitor the results of the referendum, they were like movie-goers at a horror movie, anticipating a good scare but confident of a happy ending.

Little did they realise the scale of carnage that was to come as hundreds of billions of dollars were later wiped off the value of shares in global markets.

Asian investors had gone to sleep on Thursday night on a confident note after polls showed that the Remain camp had a significant lead. Sterling had rallied to its strongest levels since December last year.

Early results, after the polls closed, from places such as Gibraltar, in which 96 per cent of the votes cast backed Remain, had not given any sign of alarm.

But after 7am in the morning, traders started getting nervy when Sunderland voted Leave with a strong margin and Newcastle upon Tyne came up with a narrow margin for Remain.

One currency trader here said: "When we saw that early votes had tilted towards Leave, we didn't initially make much of it. But as the votes tallied up, it was clear things were moving in the other direction and that's when panic set in."

Mr Nizam Idris, head of forex strategy at Macquarie bank, called it a "seismic event".

"I've not seen volatility like this before," he said. "Today there was yelling across the room, trying to get trades done. Global banks had crazy orders, so you had to shout to get your orders through."

Mr Tim Condon, head of Asian research at ING Group in Singapore, told Bloomberg: "A lot of people have been caught off-guard."

Mr Alex Wijaya, senior sales trader at CMC Markets, said that while the panic was short lived, "the traders positioned globally watching this event made that fall so much faster".

As more Leave votes came in after Asian markets opened, the pound slid further. Just before noon, the BBC called the result as Leave. Soon after, the pound dived 10 per cent against the greenback to its lowest level in 31 years. Sterling went to a historic low of S$1.8020 at 12.28pm.

There was also concern on a personal level with some Britons working here telling The Straits Times that they were in shock.

Ms Rosie Fennell, 41, a learning and development consultant, said she felt emotional and "ashamed that Britain had chosen isolation".

Ms Fennell, who is moving back to Britain next month after 16 years in Asia, said she had been excited to return, but is now uncertain about whether she made the right choice.

She is also worried for what Brexit might mean for her children: "They will have fewer opportunities... They won't have the opportunity that I had, which was to work anywhere in Europe."

Yesterday saw London's FTSE 100 fall as much as 8.38 per cent, the worst one-day fall since the 2008 financial crisis. The Straits Times Index slumped 2.09 per cent to 2,735.39 points, while the Nikkei was ravaged, plunging nearly 8 per cent.

Wall Street also took fright last night with the Dow Jones Industrial Average 2.8 per cent or 510 points lower at 17,500.74 points after the opening bell.

A version of this article appeared in the print edition of The Straits Times on June 25, 2016, with the headline 'Shock and horror for markets and traders'. Print Edition | Subscribe