While polls showing an advantage for the campaign to secede from the EU have sent a measure of the swings affecting sterling to a seven-year high this week, a similar gauge for the stock market has been steadier.
The FTSE 100 volatility index is now the lowest ever relative to its currency counterpart, according to data going back to 2008.
The benefits of a weaker sterling for UK exporters (although almost the opposite for exporters in Ireland) and the boost stocks received from improving commodity prices, help explain some of the relative calm in the country’s equities, according to Mark Richards, a global strategist at JP Morgan Asset Management.
The 4.5% dividend yield offered by FTSE 100 companies, about 1.7 times that of global shares, makes them attractive, he said.
The shares are the top performers among their major regional peers this year.
“Equities have been reflecting other trends,” Mr Richards said from London. His firm oversees $1.7trn (€1.52trn) in investments.
“The UK equity market is certainly reflecting EU referendum risks, but it’s nowhere near as extended as currency volatility — the currency being much more a reflection of domestic conditions compared to the international nature of the equity market.”
The FTSE 100 Index has slipped by less than 1% this year. That’s less than the 7.2% slump in the Euro Stoxx 50 Index.
While global factors have a greater impact on its members — heavyweights such as HSBC Holdings and Royal Dutch Shell get about 65% of their sales outside Europe — even the FTSE 250 Index of companies more dependent on the domestic economy has dropped just 2%.
The gauge has been even less volatile than the FTSE 100 in the past month.
By comparison, sterling has fallen the most among its major peers in 2016, and a Chicago Board Options Exchange measure tracking its expected swings has jumped 31% this week alone.
Equities are not entirely immune to the vote scheduled for June 23.
The gauge of FTSE 100 volatility has increased 18% in the past four days, more than similar indexes tracking estimated stock swings in the US and the eurozone.
While Tuesday’s polls triggered this week’s moves, other surveys have suggested the Leave and Stay campaigns are neck-and-neck.
“The equity market is not pricing a very high probability for a Brexit scenario right now,” said Michael Kapler, an equities manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany.
“The closer we come to June 23, even if polls are equal on both sides, the more volatility will rise. And if it really comes to a Brexit, then volatility will rise a lot.”
German chancellor Angela Merkel this week cited trade and the single market as key reasons for the UK to stay in the EU, warning that it would lose influence if it leaves.
Bank of England governor Mark Carney said last month a vote to exit could cause a recession in the country.
Fund managers’ allocation to British equities fell to its lowest level since 2008, according to Bank of America survey published last month.
Much of the Brexit concern is probably priced in already, said Guillermo Hernandez Sampere, head of trading at MPPM in Eppstein, Germany.
“British companies will not cease to exist even if the British vote to leave the EU,” said Mr Hernandez Sampere, who helps manage €220m of assets.
“The currency is different — it’s the perfect playground for fast money players. If you ask people what’s going to happen after a Brexit, the only honest answer that everyone may give is ‘we don’t know’.”
Aleksandra Gjorgievska writes for Bloomberg.