Market Report: Fancy a gamble on a Brexit? You might get better odds gambling on the stock market’s reaction

JPMorgan believes that those who think Britain will leave the EU should bet against property, financial and industrial stocks

Fancy a gamble on a Brexit? (AFP/Getty Images)

If you think a Brexit is on the cards and fancy making a few quid from it, the bookies are offering you 5/4. You might, however, get better odds gambling on the stock market’s reaction.

JPMorgan believes that those who think Britain will leave the EU should bet against property, financial and industrial stocks. The broker suggested shorting housebuilder Berkeley, down 105p at 3,467p, given its reliance on London and foreign investors.

High street lenders such as Royal Bank of Scotland, 10.6p cheaper at 254p, Lloyds Banking Group, down 1.73p at 64.05p, and Barclays, off 7.85p at 182.05p, could come under pressure in the event of a Brexit because it could trigger another Scottish referendum, the broker warned. It said fund managers with significant European assets including Schroders, down 79p at 2,511p, could be affected, while industrial stocks such as Rolls-Royce, 19p lower at 531p, and Johnson Matthey, down 83p at 2,362p, may also be exposed.

Anyone shorting stocks would have been in the money as a sea of red engulfed them. The FTSE 100 officially entered a “bear market” – when shares drop 20 per cent from a peak. The UK’s blue-chip index racked up its biggest slump since August, crashing 203.22 points, or 3.5 per cent, to 5,673.58 as the fall in oil prices showed no signs of slowing.

Randgold Resources, which shone 148p higher at 4,416p, was one of only two risers as investors fled to the safe haven of gold. The other was Sports Direct, up 9.1p at 403.9p.

Pearson crashed 27p to a six-year low of 657.5p as Panmure Gordon slashed its target price. Analyst Jonathan Helliwell reckons Sidney Taurel, the chairman who joined this month, will cut the dividend on Thursday, which he says “does not look sustainable at current levels of earnings”.

Among the few winners on Aim was Fastjet, which rose 3.5p to 69.25p as EasyJet’s founder Sir Stelios Haji-Ioannou increased his stake in the troubled African airline to 12.6 per cent. The entrepreneur plans to vote against the high executive pay at EasyHotel, 1.5p worse off at 88p, at Thursday’s annual general meeting.