Fund managers tally the cost of a ‘Brexit’

As the first ballot counts began to suggest that the UK had voted to leave the European Union, the British pound plummeted, global stocks tumbled and fund manager Richard Benson ordered a taxi.

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Benson, co-head of portfolio investments at $ 15 billion fund Millennium Global Investments, was planning to monitor the referendum results from home but instead, not long after midnight, rushed to his office in central London.

“It was a big, big shock,” Benson said.

More than 3,500 miles away, Randy Warren, chief investment officer of US fund Warren Financial Service, was in the living room of his Philadelphia home, following the action from his laptop. “I still struggle to understand why the British did this.”

Hours earlier, financial markets and opinion polls were predicting that Britain would vote stay in the European Union. By 4am UK time it became clear that this wouldn’t be the case, roiling global markets and reverberating through trading floors and living rooms around the world.

From a New York trading room, Marc Chandler watched the British pound fall to its lowest level in more than 30 years in one night.

“I’ve been on Wall Street for 30 years and there are a few days that stand out: the 1987 crash, the fall of Lehman Brothers,’ said Chandler, the global head of foreign-exchange strategy at Brown Brothers Harriman. ”This is one of those days.”

The pound traded as low as $ 1.3230 in London’s early hours, its lowest level since 1985.

Few markets were spared. London’s FTSE 100 and the Stoxx Europe 600 both plummeted over 8% in the early minutes of trading. The Nikkei Stock Average fell nearly 8% as the yen gained 2% against the dollar, and the price of other safe havens, like gold, soared.

Brent, the international oil price gauge, shed over 5% to $ 48.33 a barrel in early trade on June 24. London copper prices dropped nearly 3% to $ 4,643.50 a metric ton.

It was a big hit for investors who had bet that the UK would choose to stay.

“If we get a leave, no one’s positioned for it,” said Kay Van-Petersen, global macro strategist for Saxo Capital Markets in Singapore, speaking as the first results showed the result leaning towards a so-called Brexit.

Bob Browne, chief investment officer at Northern Trust, was waiting in his car Thursday evening in Highland Park, Illinois, checking his mobile phone when the early indications of an upset began to come in.

“It was part wishful thinking hours earlier…people were just betting on results the market really wanted,” he said.

Kenichiro Ikezawa, a Tokyo-based fixed-income fund manager at Daiwa SB Investments, had arrived at his Tokyo office early Friday ready to load up on positions, such as bonds, that would benefit from a ‘remain’ vote in the UK.

Within a few hours, as the results pointed to a ‘leave’ vote, Ikezawa changed his mind.

“I totally backed off,” he said.

In the days before the vote Van-Petersen had laid out contingency plans for clients if Britain voted to leave the EU: buy the yen, gold and US treasuries while shorting the euro against the US dollar.

As the results came in investors were putting in those trades, he said.

While ballots were being counted across the UK, traders on the other side of the world were combining quick fire market reaction with a rapid geography lesson.

Yusuke Sakai, a senior trader at T&D Asset Management in Tokyo, watched the yen shoot up against the dollar and pound when results from Sunderland, England came in showing a bigger-than-expected vote to quit Europe.

“Wow. What a big move. I don’t even know where this is?” he said. “It must be a rural town or something,” he said of the northern English city.

From laptops, terminals and cellphones, investors from Shanghai to Toronto were being reminded of the intensely global nature of modern markets and economies.

“If [the Brexit vote] happened 10 years ago, probably no one would care in China,” Gu Yuan, a 31-year old retail investor from Shanghai said after hearing the news on Chinese social media. “Now everyone is watching.”

The Shanghai Composite Index closed down 1.3%.

As the implications of the vote dawned around the world traders and funds rushed to react.

While Warren watched global markets slump from his Philadelphia living room, he began thinking about how he could profit. The investor plans to wake up early in the US morning and start picking up stocks on the cheap.

On his buy list: US shares like MacDonalds, Nike, Home Depot and Lockheed Martin that he thinks will be undeservedly swept up in the broader turmoil

“It’s a good opportunity to make some money.”

But many saw darker clouds and wondered how the markets would cope.

Ahead of the end result, San Diego-based Sunrise Capital Partners shut down most of its short term-trading systems, wary that they would be ill-equipped to deal with the volatility that a Brexit would generate in currency markets.

“There’s no predictable pattern, it’s going to be one shock after another.” said Christopher Stanton, who helps oversee about $ 725 million at the firm.

“I am stunned at how cavalier the market has been in positioning for this move,” Stanton said.

Write to Georgi Kantchev at, Kosaku Narioka at and Chao Deng at

Chesley Dulaney, Dominique Fong, Yifan Xie and Ira Iosebashvili contributed to this article, which was published by The Wall Street Journal

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