Uncertainty continues to grow as the reality of the United Kingdom leaving the European Union begins to set in. Mergers such as the one proposed from Germany’s Deutsche Börse and the London Stock Exchange are showing signs of a potential collapse. The FT article LSE-Deutsche Börse dealmakers were wrong to ignore Brexit risk, discusses the proposed merger of London with Frankfurt as: “a behemoth able to trade in equities and futures, and supply benchmarks, index and data analytics”, and suggests that because the terms of the deal were laid out before Brexit, the deal will not be able to be adjusted, and therefore will be challenging to implement.
The impact of Brexit on European indexes such as the MSCI Europe Index and the Stoxx 600, that include companies based in United Kingdom, are showing more optimistic signals. The Bloomberg Markets article U.K. Stocks Are Staying in Europe, suggests that both the MSCI Europe Index and the Stoxx 600 will continue to index companies based in the UK. This analysis was confirmed by Remy Briand, Global Head of Research at MSCI Inc.’s: “The nation’s shares will stay in the MSCI Europe Index as membership in the trading bloc has no bearing on the gauge’s make-up”.