In Brexit month, investors dump shares, flee for safety of cash

Thu Jun 30, 2016 8:43am EDT
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By Sujata Rao

LONDON (Reuters) - Global investors bought real estate, added to cash holdings and cut equity allocations to the lowest in at least five years as this month's shock Brexit vote added to an already toxic mix of sluggish world growth and volatile markets.

The monthly Reuters survey of 44 fund managers and chief investment officers in the United States, Europe, Japan and Britain was conducted between June 15-29, straddling the June 23 referendum in which Britons voted to leave the European Union.

The verdict, which drove sterling to 31-year lows and wiped $2 trillion off world stocks, heralds intense political and economic uncertainty for the UK, with likely repercussions for the euro zone as well as the rest of the world.

Close to two-thirds of poll responses were received after the vote, but many of those who responded beforehand said they had positioned defensively, given the uncertainties already roiling world markets.

This includes the looming U.S. presidential election which could bring victory for Republican Donald Trump - an outcome that two-thirds of those who responded to a special question said would have negative consequences.

Allocations to cash stood at 6.8 percent on average, having risen every month since February and the highest since last June, the survey showed.

In almost every region, investors dumped shares, with the average global holding at 45 percent, the lowest since before May 2011 at least and down from nearly 50 at the end of last year.

European funds' equity allocations hit the lowest in over four years.   Continued...

A man is reflected in an electronic board showing the graph of the recent fluctuations of the Tokyo Stock Price Index (TOPIX) outside a brokerage in Tokyo, Japan, June 27, 2016.  REUTERS/Toru Hanai