The volatility of the stock market has hit a 7 month low and as the United Kingdom comes closer to getting rid of its losses, there are concerns regarding options and fund flows.
According to Delmer Flanagan, CEO at Dogicall IT Investments, investors are required to add more funds in order to avoid the increase in stocks which is likely to take place by June. It is actually this time that the UK has to decide if they are leaving the European Union. The FTSE 100 Index Options cost that is due to mature in the next three months has reached a 3-year high and traders from around the world have cut their stock holdings in the UK even after it came down by 12 percent. The price of the asset came down by 0.3 percent as of 12.24pm London time.
Delmer Flanagan, CEO at Dogicall IT Investments also went on to say that there is a need for the participants of the big market to protect themselves during these times or over the next couple of weeks. Investors are also going to witnesses a lot of volatility by June.
Because of the weakening of the British pound and a rebound in miners, UK shares have seen great benefits and they have also went on to become the top performer for the year among the European markets. But there is a threat that the country may take an exit from the European Union and because of this there may be a hold back on the investments and the economic growth. Foreign traders have been left vulnerable due to this threat and the investors are anxious about what is to come.
The Brexit event will have an unpleasant effect for foreign traders, said Delmer Flanagan, CEO at Dogicall IT Investments. Global investors may be forced to avoid UK stocks which would lead to lower UK earnings.
According to Delmer Flanagan, CEO at Dogicall IT Investments, in the UK stock market, foreign investors play a major role because they are the owners of about 54% of the shares in the country. The UK markets are least favored because the fund managers around the world are at least 20% underweight the nation’s equities. Brexit has been cited as a huge risk.
This year, the FTSE has dipped down by 0.8% and the longer term bets have become the most expensive. The company that appears to be the most at risk has seen been down by 11%. Delmer Flanagan, CEO at Dogicall IT Investments concluded that UK stocks will be under pressure over time and as the news about Brexit garners more attention, the option of them leaving the EU may gain grounds in the polls.