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Brexit: Fine wine market "returning to normality"

Published:  27 June, 2016

The bottom line from fine wine trading platform Livex is that normality is creeping back into the market following the referendum's shock result on Friday.

The bottom line from fine wine trading platform Livex is that normality is creeping back into the market following the referendum's shock result on Friday.

Immediately after the leave result was announced, global buyers investing in the predominantly Eurocentric fine wine market rushed to take advantage of the drop in sterling, buying up - and selling - wines predominantly from France.

But as of today (Monday), the market is already re-finding a balance.

"The moment the result was announced early on Friday morning, sterling started to fall dramatically and buyers across Europe, the US and Asia buying in euros and dollars were in a stronger position.

"Buyers were certainly been taking advantage of the dramatic 10% swing on Friday, but it's much quieter today," Livex co-founder Justin Gibbs said.

The world and especially the UK took a collective intake of breath as sterling went into freefall on Friday.

It will come as a relief to many in the trade then that trading platforms such a Livex are reporting that the market has already "bounced back" considerably and as of today (June 27), the market had returned to levels similar to around a week ago.

Gibbs explained that in the run up to the referendum, buyers became increasingly "risk-averse" and began to reduced their exposure in the market.

"In the week running-up to the referendum, activity became thinner and committed bids declined," he explained.

"As soon as the result was announced, those with live bids still in the market began buying and as Friday progressed, those who had withdrawn, re-entered the market. Interestingly, we saw a lot of sellers building their exposure too. By the end of the day we saw an element normality come back to the market."

Livex has members in 35 countries globally, with 97% of wines originating from Europe compared to just 3% from the New World.

Although the fine wine trade is not an exact small-scale replica of the wider economy, many will take comfort from Gibbs' assertion that the drop on Friday was no worse than other recent economic downturns.

"We've had currency shocks in the past - during the Greek crisis there were wild swings. The market tends to swing during times of uncertainty, then it finds a period of calm. Today feels the same," he said.

Look to the coming weeks, Gibbs said there is likely to be some hesitancy in the market, although overall this should not impact the fine wine trade drastically.

"There will gyrations for some time to come, as people are more likely to watch rather than act. The fine wine market is quite small in comparison to the economy, but I think it's safe to say that it probably won't be dramatically affected."

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