Brexit cost investors $2.7 trillion, the worst one day drop ever

Brexit cost investors $2.7 trillion, the worst one day drop ever

The UK's referendum to leave the European Union was a costly decision in more ways than one.

Worldwide markets hemorrhaged more than $2 trillion (S$2.7 trillion) in paper wealth on Friday, according to data from S&P Global, the worst on record. For context, that figure eclipsed the whipsaw trading sessions of the 2008 financial crisis, according to S&P analyst Howard Silverblatt.

The prior one day sell-off record was $1.9 trillion back in September of 2008, Silverblatt noted. According to S&P's Broad Market Index, combined market capitalisation is currently worth nearly $42 trillion.

As bourses sold off from Asia to the US, the fallout from Brexit culminated in the Dow Jones Industrial Average racking up a 600 point loss. Bloomberg's Billionaires Index noted that the world's 400 wealthiest investors lost a combined $127 billion in Friday's market downturn.

"Brexit is the biggest global monetary shock since 2008," said David Beckworth, a scholar at the Mercatus Center at George Mason University, in a blog post on Friday. "This could be the tipping point that turns the existing global slowdown of 2016 into a global recession."

Beckworth also noted that risks stemming from the UK's decision is "hastening the the frantic race to bottom on safe yields." Safe-haven government bond prices have soared around the world, pushing yields to near-historical lows. Bond yields move inversely of prices.

Massive demand for safe-haven assets is outstripping supply, he added, meaning currencies like the yen and US dollar, as well as government bonds and gold, are likely to keep booming.

Since Brexit became a catchphrase for markets, risk-averse investors have destroyed vast sums of wealth in fear of the potential shockwaves that could ripple through the global economy. Although analysts say an affirmative UK vote was always a possibility, markets appear to be preparing themselves for even bigger ructions-making more losses all but certain.

On Sunday, noted economist Nouriel Roubini said the UK's departure from Europe may lead to the break-up of the entire 28-trading bloc. His comments echoed those of billionaire investor George Soros, who wrote that a dissolution of the EU was "practically irreversible."

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