Gundlach Sees Brexit Likely to Fail Despite Leading in Pollsby
U.K. exit would be ‘beginning of end’ for euro zone, he says
Surveys this week show voters favor leaving European Union
Jeffrey Gundlach, manager of the $60.3 billion DoubleLine Total Return Bond Fund, said the Brexit referendum is likely to fail despite leading in several recent polls.
“I believe ‘Stay’ will prevail,” Gundlach said Tuesday on an investor webcast.
Multiple surveys this week showed the “Leave” campaign ahead of the “Remain” side, sending global stocks and the pound down. Gundlach, whose Los Angeles-based firm DoubleLine Capital oversees $100 billion, said he thinks polls reflect people’s complaints and frustration rather than the actions they’ll take when voting in the June 23 referendum.
“I believe that ‘Leave’ is over-polling, it’s punching above its weight class,” the fund manager said. “When it comes up for a vote, I think it will fail.”
While the U.K. didn’t join the European currency bloc, its exit from the continental union would be “the beginning of the end of the euro zone,” Gundlach said. Bond yields in peripheral countries such as Italy and Spain have been rising amid concern that a U.K. “Leave” vote would lead to a fracturing of the group, he said.
Most of the biggest betting firms and exchanges in the U.K., Ireland and beyond place a 60 percent or better chance on U.K. Prime Minister David Cameron averting a so-called Brexit. That’s even after five polls published this week showed the “Leave” side ahead, with the latest survey giving it as much as a 7 percentage-point lead over “Remain.”