When the United Kingdom voted Thursday to leave the European Union, extraordinary volatility swept the world’s stock markets.
Investors who position themselves carefully now could now reap the rewards from the stock market as Britain leaves the European Union (EU).
Many firms and areas of the economy stand to gain in a post-Brexit world and provide investors new opportunities to grow cash, according to experts. Savvy investors will also profit massively from the increased volatility.
Freedom from EU bureaucracy and even a weakened pound are among the factors that could give a welcome boost to certain stocks in the longer term.
As markets digest the result, the pound has weakened, which is set to hurt British holidaymakers heading abroad.
But a fall in sterling is actually be a boon for many firms listed on Britain's top stock market the FTSE 100.
In part this is because many of the companies generate most of their sales outside the UK, but report in pounds - including the likes of Rio Tinto and Royal Dutch Shell.
Although banks have been among the stocks that are suffering the biggest losses, in the future financial firms could flourish amid the end of burdensome regulation from Brussels, said experts.
The world isn’t ending, it's changing with new challenges and opportunities – let’s today not forget the opportunities. Markets are forward looking, the dust will settle and investor confidence will return.
TD Direct Investing
And that means investors should consider different scenarios. Here are three that come to mind:
· Global dissolution. Under this scenario, Brexit marks the beginning of the end for globalization. The EU falls apart as other countries withdraw from the EU. The U.S. rips up its trade agreements and stops making payment on its debts. Financial markets collapse.
· Minor UK economic disruption. Here, the UK spends the next three years making changes to its contracts with the rest of the EU and ultimately decides to just move on and work with the EU under existing WTO rules – resulting in a temporary slowdown in the UK economy that ultimately sets the country up for a recovery.
· UK decline, global stability. Under this scenario, the rest of the EU decides to push through tariff-heavy terms for the UK’s continued trading with the EU. The UK grudgingly accepts these terms and suffers a significant slowdown in economic growth which leads companies and workers out of the UK.