Stress test predicted the stock market decline of the EU by 24% in the case of Brexit


European stock market could fall by 24% in the case that the referendum on 23 June UK residents will vote for the country’s withdrawal from the European Union, reports Bloomberg, citing the results of stress tests conducted by the company Axioma Inc.

During the stress test, the analysts wanted to find out what is the impact on different assets may have the vote of Britons in favor of leaving the country. In order to simulate the potential impact of Brexit on the market, Axioma analyzed the market reaction to events that have already occurred, including the European debt crisis and the referendum on Scottish independence. This influence, analysts studied on the example of the investment portfolio, with 54% consisting of bonds, 41% stocks and 9% from other types of assets. According to the results of the stress test revealed that the largest drop — about 24% — awaiting stock. Investments denominated in pound sterling will fall by 10%, showed the stress test.

The weakening pound UK equities this year have demonstrated good performance, but, according to the Axioma, they are at risk.

“There is an assumption that Brexit won’t happen. If this happen, nobody will be mentally prepared for it,” said one of the study’s authors Philip Jacob. “(In this case) we will see serious progress in the market,” he said.

In Axioma stressed that the results of the stress-testo demonstrate only a short-term reaction to the possible outcome of the referendum in the UK and do not allow to draw conclusions about structural changes in the case of the United Kingdom from the EU.

Earlier, rating Agency Standard & Poors introduced an index of sensitivity to Brexit. According to him, most painfully, for a British exit from the EU will react Ireland, Malta, Luxembourg and Cyprus. According to the Bureau of economic policy analysis of the Netherlands (CPB), the consequences of a British exit from the European Union hardest hit Ireland and the Benelux countries. The Netherlands, which are in the S&P is the seventh highest, against Brexit could lose €10 billion by 2030, analysts say CPB.

The latest polls showed the approximate equality supporters out of the EU and those who want to keep the country in the community.