Wall Street and Asian indices including JCI have rebounded after falling fairly within two trading days after the official statement of the referendum results. But has the volatility of the market really ended? And can investors now take greater risks? Yes and yes.
Earlier in the article entitled “The Brexit Impact: Temporary Volatility”, Sinarmas Securities and Daewoo Securities estimated the occurrence of a temporary volatility and recommended either to get into bluechip stocks or to reduce exposure in stocks for a while. Daewoo and Trimegah in “Brexit will Increase Volatility in Stock Market” also stated that while the Brexit effects will not significantly affect the Indonesian economy, it will still cause a potential depreciation of the Rupiah. Bank Indonesia has repeatedly assured the market that the results of the referendum will have no significant impact to the country’s economy.
The effect of post-Brexit volatility may already be over, and investors can make decisions that are more strategic. However, the Brexit process does not stop here. There are three things that became the epicenter of the aftershocks in the financial markets with the Statements of Article 50, a second referendum, because many British people feel that they were not able to make their decision, and there are some countries waiting to overtake Britain, further causing a divide in the region.
Article 50 is one of the articles in the Lisbon Agreement which states that the country that wishes to breakaway must make a formal statement of separation. This will then be followed by a 2-year process used to discuss Britain’s relations with other countries in the European Union.
Unfortunately, Prime Minister David Cameron resigned shortly after the referendum result was announced. As a result, the British statement will have to wait for Cameron’s replacement. Brussels has already refused to talk before the statement is released from the British side. And so the market shall wait…
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