Aberdeen Says It Follows the Bookies in Seeing 30% Brexit Riskby and
Real estate market most impacted in lead up to June 23 EU vote
Bookmaker William Hill sees 73% chance of remain vote winning
Recent polls are overstating the probability of the U.K. exiting the European Union and bookmakers that currently predict about a 30 percent chance of a vote to leave the bloc provide the best guide, according to Aberdeen Asset Management Plc, Europe’s third-largest publicly-traded money manager.
“I tend to put quite a lot of store in what the bookmakers are saying because there is real money changing hands when the bookmakers set their odds,” Richard Dunbar, senior global investment strategist at Aberdeen, which oversees about $420 billion of assets, said in New York on Thursday. “I suspect that the bookmakers’ odds are correctly reflecting the probability.”
An online poll by YouGov Plc published in the London-based Times newspaper on Tuesday showed “Remain” at 43 percent and “Leave” at 42 percent. The pound fell on Monday when a survey published by the same pollster had “Leave” in the lead at 45 percent and “Remain” at 41 percent. Bookmaker William Hill Plc, by contrast, has put the odds of the U.K. opting to stay in the bloc at about 73 percent.
“Some investors are sitting on their hands and waiting to see what happens,” Dunbar said. “A Brexit vote would be a surprise and a vote that markets are not currently set up for.”
Uncertainty surrounding the June 23 EU referendum is weighing on investment and hiring in the U.K., with the Bank of England and other institutions warning that leaving the 28-member bloc would damage the economy.
“Clearly it’s evolving, it’s unknowable,” Gregory Peters, who helps manage more than $600 billion at Prudential Financial Inc.’s fixed-income operation, said Thursday in an interview with Bloomberg Television. “It’s hard to protect yourself from an overall portfolio standpoint. I think it has slowed down trading activity, I would submit it’s probably slowed down economic activity.”
The looming vote has had the most impact in real estate markets, particularly in London, Aberdeen’s Dunbar said. U.K. house prices look set to dip for the first time since 2012 amid uncertainty before the vote and as a new tax on buy-to-let properties and second homes kicks in. The U.K.’s 10-year government bond yield dropped to a record on Thursday.
U.K. asset managers Henderson Group Plc and Ashmore Group Plc have said they expect that a vote in favor of Britain leaving the EU would have a minimal impact on their businesses. Aberdeen’s CEO Martin Gilbert has also said that while an exit vote would be “inconvenient, it would not be too disastrous.”