Singapore traders gear up for B-day

A man leaves a local polling station after casting his ballot in the UK referendum in Gibraltar, on June 23, 2016.
A man leaves a local polling station after casting his ballot in the UK referendum in Gibraltar, on June 23, 2016.PHOTO: AFP

SINGAPORE - Currency traders are gearing up for high-octane action tomorrow (June 24) as the region's biggest foreign exchange centre braces for turmoil ahead of the results of the UK referendum on the European Union.

Polls will close at 10pm today (June 23) in Britain (5am Singapore time), with results expected to trickle in from midnight. The overall result is expected to emerge from between 3.30am and 7am in Britain, or 10.30am here.

Most traders in Singapore will be hard at it from the crack of dawn.

Mr Stephen Innes, a senior trader at foreign exchange trading platform Oanda, and his team of brokers plans to start at 3am to be more "psychologically prepared".

 
 

"In my experience going into high-risk events, it's better to pick up the momentum and trends early... You have some time to speak to your colleagues and strategise."

Mr Innes added that teams in New York and London will also be pulling double duty.

Unlike many who told The Straits Times that they were waiting for the week to be over, Mr Innes said he is looking forward to the results tomorrow.

He likened the event to the 1995 Quebec referendum when the province voted on whether to break away from Canada, a prospect that sparked volatility in the Canadian dollar.

Mr Innes, who has been trading since 1982, said: "We didn't have the same electronic technology then, but the mental preparation is very similar...There's very little that we have prepared for in the modern electronic age that actually compares to this event, which is why it's such an exciting event."

It is not just the traders who will be in for a long slog tomorrow. Lawyers, fund managers and consultants will be working overtime to deal with queries.

Mr Paul Landless, a Singapore partner at UK-headquartered law firm Clifford Chance, said that the firm had set up a round-the-clock "war room" in London for queries.

"We will have a dedicated 24-hour EU referendum operations room in London open from 7am, June 23, for as long as necessary. We will be monitoring the vote, the financial markets and responding to clients' urgent questions and issues."

Mr Andrew Naylor, executive director of consultancy Cicero Group, said the firm will be sending updates as the results trickle in to ensure that clients have early warnings.

He added that financial sector clients were more concerned while some American firms already discussing alternative office locations.

"Some businesses are looking at office locations like Dublin, Luxembourg and Frankfurt. However, they won't make the decision to relocate from the UK until it becomes clear what the final settlement looks like."

Most are holding back on making major investment and financial decisions.

Mr Nicholas Wilcox, European equity executive director at JP Morgan Asset Management, said that there had been a huge uptick in client queries but fewer transactions.

"There will be a lot of noise on Friday, but I don't expect many people to be making their investment decisions until the final results are out," he added.

Sentiment was better today, said analysts, as the pound continued its rally, trading at 1.9928 against the Singdollar today, more than 1 per cent up from Tuesday.

But Mr Vasu Menon, vice president and senior investment strategist at OCBC, called markets "complacent" and warned of turbulence tomorrow.

"The pound is at a six-month high, while the UK stock market has outperformed its European peers. So, if Brexit does happen, it will spook markets and we could see a significant correction."

Mr Ian Laing, head of Asia at law firm Pensent Masons, also added that many businesses have not prepared for the possibility of a Brexit, with many in the "wait-and-see camp."

He cited a survey of more than 1,000 businesses in the UK, France and Germany, which found that only 26 per cent of firms had a tangible plan in place for dealing with the risks arising from "Brexit".

While he admitted that there was little clients could do so close to the revealing of the results, he had one key message for clients - "don't panic!", adding that it would take two years to negotiate the terms of a British exit.

Meanwhile, analysts and traders in the equities and bond markets braced for Brexit with a wait-and-watch attitude, ready to react on the fly as the results start coming in.

"We are lucky that the results will be played out in real time for us," remisier Desmond Leong told The Straits Times, adding that the mood in the equity market was not too anxious.

Mr Leong said h the next step is to get a good night's sleep and come in slightly early to work tomorrow to be ready for the result.

Ms Margaret Yang, CMC's analyst for Singapore, was also in favour of keeping the energy levels high for tomorrow by getting good rest tonight.

"We are all excited for the big event," Ms Yang said about her team of more than 20 staff in Singapore. CMC has global support at hand from various teams in offices around the globe to deal with inquiries and surging volumes, if any.

Bank of Singapore chief economist Richard Jerram, who has been closely interacting with clients for the past couple of weeks, said Brexit has been top of the list of concerns for most.

"Nervous sentiment exists," he said.

He said his team has been communicating intensively and preparing thoroughly over recent weeks and they plan to get good rest before the big day tomorrow.

"We hope the result is clear enough," he said.

xinen@sph.com.sg, rupsk@sph.com.sg