Investment Week In Review - 27 June 2016

By Michelle Heffernan - June 27, 2016

An historic week in global economics as the United Kingdom voted to leave the EU.

News In Review

  • The UK voted to leave the European Union, with the vote capturing approximately 52% of the populace.
  • After six years at Downing Street, David Cameron resigned from his position as Prime Minister. 
  • Spain has cast their ballots in the second election in six months with the Conservative Party winning over 30% of the vote. This vote followed December’s general election which resulted in a hung parliament.
  • In Europe, manufacturing fell to a 17 month low of 52.8 on the PMI scale. The pronounced political uncertainty surrounding the ‘Brexit’ referendum has been a clear hindrance on business confidence and expansion.
  • US existing home sales rose 1.8% in May to the highest level recorded since 2007, the latest sign of rising housing demand amid strengthening US employment figures and historically low mortgage rates. 
  • The ABS reported a 0.2% decline in Australian house prices the first quarter of 2016. This represents the first quarterly decline since September 2012. Prices on a year on year basis were still up 6.8%.
  • The RBA minutes from the meeting in which rates were left on hold provided no clear easing bias stating, “the Board judged that leaving the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and inflation returning to target over time.”
  • China’s property price data revealed a 6.9% annual increase across the country. The three main commercial hubs of Shanghai, Beijing and Guangzhou continued to show remarkable growth, registering annual growth rates of 27.8%, 19.1%, and 18.8% respectively.


In what will be remembered as an historic day in economic history, 51.9% of the UK populace voted to leave the European Union.

London, Scotland and Northern Ireland voted to remain a part of the EU, with the remainder of the outer counties of England voting to leave. The vote brought attention to the political and economic imbalances within the country, with the rich and wealthy concentrated in London and the working class concentrated to the outer counties where household incomes are lower than the rest of the country. Scotland’s vote to remain acknowledges the benefits provided to the region by the EU.

The vote to leave was heavily weighted towards the age 50+ generation. Approximately 64% of those aged under 24 voted to remain a part of the EU. The younger generation will now live with the consequences of a result against their wishes for many more years than the older generation

Source:The Age

The vote is not legally binding and therefore, there is a possibility that it could be overturned or sent to a second referendum vote. 

Britain is expected to invoke Article 50 (the formal method of a country leaving the EU under the Lisbon Treaty), resulting in a two year window in which to negotiate a new treaty to replace the terms of the EU membership. With two years of negotiation ahead, the uncertainty this vote has created is expected to result in continued market volatility, with UK businesses under pressure, job losses on the cards, pressure on the currency and the potential risk of a recession in the UK.

For the remaining countries still a part of the EU, Britain’s momentous decision to leave the EU could help clear a path for reforms by the remaining EU member countries, and could cement the EU as a viable political union in the long run. 

The Week Ahead

  • US: Consumer Confidence (JUN), US ISM Manufacturing PMI
  • Australia: Private Sector Credit (YoY) (MAY), AiG Performance of Manufacturing Index (JUN)
  • UK: Mortgage Approvals (MAY), Nationwide House Price (YoY)
  • Europe: EU Parliament to Vote on Resolution on U.K. Referendum, Unemployment Rate (May)
  • China: CNY Leading Index (MAY), NBS Manufacturing PMI

Company News

  • SEEK announced it has increased its ownership in Brasil Online from 51% to 100% and substantially increased ownership in SEEK Asia. CEO Andrew Bassat claimed the deals will boost earnings per share in fiscal 2017 and beyond. 

  • ANZ chief executive Shayne Elliott touted the success of its new partnership with Apple Pay, claiming the technology is prompting more customers to open accounts, or start using credit cards that had been lying dormant. ANZ is the first of the major banks to offer Apple Pay.

  • The ASX invested a further $9.5 million to increase its stake in blockchain company Digital Asset, the ASX’s preferred partner for the technology that will underpin the stock exchange’s new post-trade cash equities platform.

  • Online Chinese retailer became the first company ever to deliver its packages by drones. Rival Amazon says it has built more advanced drones but can’t use them because American regulators have made it a criminal offense for businesses to use the technology.

Markets in Review


Capital Return





S&P ASX 200








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$1 Australian buys you:








ASX200 Sector Performance for the Week

ASX200 Biggest Movers for the Week


This material is intended for the use of the clients of Pitcher Partners Investment Services only.  It is current at the date of preparation, but may be subject to change.  This document does not constitute financial product advice.  It is of a general nature and has been prepared without taking into account any person’s objectives, financial situation or needs.  Before acting on the information you should consider the appropriateness of it having regard to your objectives, financial situation or needs and seek independent advice.  You should obtain and consider a Product Disclosure Statement in relation to any financial product before making any decision about acquiring the product.  To the maximum extent permitted by law, Pitcher Partners Investment Services Pty Ltd and its representatives will not be liable for any loss or damage incurred by any person directly or indirectly for any use or reliance on this document.

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