Investing After Brexit

Brexit has set the financial markets tumbling, wiping $2 trillion off world markets. While there is little or no clear direction on how the crisis may be resolved, our strategies and analysis are to give you an idea on how to trade during this period of volatility. We are pleased to share their outlook on gold, global equities, oil and currencies for the next half of 2016.

 

On gold -
"After a big rally due to Brexit, gold price is expected to rise further but at a slower pace. Current level of 1290 to 1345 seemed stable. Market participants will look closely at the Fed's next move, but the chance for a rate hike soon is almost negligible. Investors are worried that about other EU nations’ reactions after UK’s departure. Gold is hence seeing safe-haven demand and will be a great hedging tool. At first,1450 should be attainable before the end of 2016." More and more uncertainties from UK's delay of completing Brexit and Terrorism of types and Results of US Presidential Election - the range of gold price might likely be traded in 1180 to 1630 in high volatility.

On global equities -
Too many regional uncertainties and the impact of conflicts of Sourh Chjna Sea add to the fickle changing economy scenario.
"We are expecting short term volatility and selling pressure in global equities to persist, but the situation should be contained very quickly. The large sell off caused by Brexit is very different from 2008 financial crisis. Right now we realize the situation is more of a political nature than a financial crisis and the U.K is not in a recession yet. The U.S. Fed is also likely to push back rate hike to later part of the year due to market uncertainty. The equities market should be supported by these factors. Post-Brexit, buying on dip would be one of the trading strategies that investors can adopt. Stock indices like the U.S Dow Jones Index futures, S&P500 index futures and MSCI Singapore Index futures would still have further upside potential after the recent rally although the room is narrow i.e. 50 to 80 points STI due to the recent global economy climax.

On oil - Crude as s major commodity -
"Oil prices may drop to about 40 USD by year-end. Britain’s actual exit from the EU may be prolonged and complicated by the resignations in the British leadership and the foreseeable lengthy negotiations with the EU authorities. In light of this, the US dollar should strengthen in the global flight for safety in this uncertainty. Oil prices will adjust downwards to compensate for this increase, short of an unexpected supply disruption."

But, the hedge funds are heavily participating in the oil battle fields to set a very extensive trading range of 27 USD to 56 USD per barrel in the coming months of 2016.

On currencies -
"Our expectations are for the GBP/USD to fall further as the UK still has to work out issues with a potential change in Prime minister and possibly another Scottish independence referendum. Trade agreements will also have to be renegotiated as they make arrangements to exit the EU. However, with EU referendum uncertainty out of the way, I see a much more controlled downward trend in the Pound."
Our best combination - 1.) Long Pound to SGD 2.) Short Yen to Euro s d 3.) Ling USD to SD

 

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