The £140billion stocks bloodbath

Britons’ vote to leave EU results in billions wiped off stocks in just 8 minutes

YESTERDAY’S 6am Brexit result bombshell wiped billions of pounds off shares on London’s stock exchange.

The resulting Brexit Bloodbath rivalled Black Wednesday and other seismic financial shocks to world market.

Some £140billion, or 8.7%, was wiped off the value of FTSE 100 index of companies within just eight minutes of markets opening.

In addition, the FTSE 250 fell 12.3% and by 7pm last night, the Dow Jones had slipped 2.8% and the Nasdaq was down 3.6%.

Falls struck early market trades in other EU exchanges, with more than 9% wiped from Germany’s DAX, nearly 7% from France’s CAC and 13% off the ISEQ index in Dublin.

The carnage had started hours earlier when just after midnight sterling slumped against the US dollar by nearly 4.7%.

Amid all-too-vivid memories of 1992’s Black Wednesday, markets started trading in what one key analyst described as ‘an opening of cataclysmic proportions’.

Dominic Rossi, global chief investment officer of Fidelity International, went so far as to predict that it would

‘Closely monitoring market impact’

lead to a UK recession. He told the Guardian newspaper: ‘European stocks are reflecting some economic impact from Brexit but I don’t think eurozone will enter a recession.

‘The UK will have the privilege of that.’

While bank shares tumbled, along with shares in insurance and building firms, Irish pension funds took a beating in the Brexit bloodbath that followed the Leave campaign’s official 6am victory declaration.

In an attempt to settle market jitters before trading closed for the weekend, the Irish Central Bank was quick to assure investors.

It said last night it was ‘closely monitoring the financial market impact and the banking sector’.

And it insisted: ‘The ECB stands ready to provide additional liquidity, if needed, in euro and foreign currencies and considers the euro area banking system resilient in terms of capital and liquidity. The Central Bank is confident that the contingency measures that are in place are appropriate to address any issues.’

However reassuring the Central Bank in Dublin and the ECB may have been , they can have done little to reassure Ireland’s 730,000 private pension holders.

They saw more than €10billion wiped off the value of their funds.

Worst affected potentially were Ireland’s 270,000 defined contribution pension fund holders, whose individual losses could have amounted to about on average €15,200-a-head.

Any losses, however, are only going to affect those who drew down on their schemes yesterday, or plan to in the coming days or weeks.

For the 469,000 or so in defined benefit pensions, the hit funds was similar. But because of the nature of these schemes, and the fact they have guaranteed annuities, they are protected somewhat.

Pension experts last night urged

Pension holders ‘should not panic’

retired people depending on private policies not to panic.

They warned that those who decided to either take money out of their defined contribution scheme yesterday or plan to over the coming days are likely to experience the biggest loss.

Rose Leonard, president of the Irish Institute of Pensions Management, said: ‘People shouldn’t panic, they should leave their money in their pension fund.

‘Remember a pension fund is for the long haul.

‘There have been worst market shocks, such as September 11, when 20-30% was wiped off market values in a day.

‘But the losses would have been recouped within a couple of years.’

One group of Irish pensioners who will suffer an immediate hit are the 160,000 Irish people who have UK state pensions and live here or in the UK. They are bound to see the value of their £120-a-week payments hit after sterling tumbled to its lowest value in more than 30 years.

A spokesperson for the Irish Stock Exchange said last night: ‘The result of the UK referendum on membership of the EU has had a significant impact on global markets including the markets of the Irish Stock Exchange.

‘The long-term impact of the decision will be largely determined by the terms of the UK exit. There are many issues for Irish people and Irish businesses in the wake of this decision; the Irish Stock Exchange will do all that it can to ensure that any potential risks to the position of the Irish capital market are managed.’