EL-ERIAN: 'There are more questions than answers as to what happens next'
Jason Reed/Reuters
But according to Mohamed El-Erian, Brexit also presents some long-term investment opportunities.
"We'll see pretty sharp movements" in the short term, he said in an interview with CNBC on Friday. "But there will also be opportunities for those who have cash in the days and weeks ahead."
El-Erian, Allianz's chief economic officer, said that it was important to be cautious, and "look for companies in particular with very strong balance sheets and positive cash flow."
There are quite a few of them in technology and other sectors, he said. For now, avoid the financial sector, despite the huge drop in bank stocks - it's just not worth the uncertainty.
"There are more questions than answers as to what happens next institutionally," El-Erian said. "You've given a major shock to the institutional setup. They're gonna have to reconnect the pipes over the next quarters."
Ultimately, he said, he thinks the EU will be fine - but in the short term there will be a lot of political and financial uncertainty, and Europe's going to take an "economic hit."
And to treat Britain with retribution would only make it worse. "The temptation would certainly be there, in order to dissuade anybody else," he said of the EU coming down hard and closing off trade to Britain. "But that would be a huge mistake on Europe's behalf… The retribution way risks even more damage."
Watch to the CNBC interview here.
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- A centenarian who starts her day with gentle exercise and loves walks shares 5 longevity tips, including staying single
- 2 states where home prices are falling because there are too many houses and not enough buyers
- "To sit and talk in the box...!" Kohli's message to critics as RCB wrecks GT in IPL Match 45
- 7 Nutritious and flavourful tiffin ideas to pack for school
- India's e-commerce market set to skyrocket as the country's digital economy surges to USD 1 Trillion by 2030
- Top 5 places to visit near Rishikesh
- Indian economy remains in bright spot: Ministry of Finance