Brexit impact to be more regional than global:Lakefield Partners

The fear of Brexit is on the rise and it is turning away investors from Europe, says Bruno Verstraete, Partner at Lakefield Partners. Europe is suffering more right now than the US. Verstraete believes that impact of a Brexit is already priced in to a large extent and will not impact Europe as much. However, the good news is that devaluation in Europe is getting better than US.Selling off is expected on the assumption of a Brexit, which will have regional impact. Countries like Ireland, Netherlands and Belgium will suffer the most on losing out on a big client like the UK, he says. On the other hand, it will benefit UK exporters. On the Federal Reserve meet, scheduled for Tuesday, Verstraete does not expect any rate action. Nervousness in markets is expected to continue, which is a great buying opportunity, he adds. Below is the transcript of Bruno Verstraete's interview with CNBC-TV18's Surabhi Upadhyay.Q: What do you make of the heightened risk aversion, the fact that the 10-year Bund yield continues to be in negative territory, is there is a lot of perhaps unnecessary panic? Do you think this is justified given the big events?A: I believe the fear of potential Brexit is increasing. Only the fact that there is a mere chance that it is happening is turning off a lot of investors from European markets. It is clearly Europe which is suffering at this stage not the US to such an extent. I think there is a flight towards safety and hence the negative yields in the 10-year Bund.I do believe that there is an exaggeration. I am not saying that it will or will not happen - Brexit but I believe that a lot of it is already in the prices and it should not necessarily impact Europe as much as it is already priced in.The good news is that the valuations in Europe are clearly getting better in comparison to the US but I believe globally whether the UK is part of the EU or not is not going to make much of a difference.Q: How much more on the downside? This is all hypothesis right now. If there is a Brexit is it already priced in or would you expect a further crack. Some of the markets like the Dax are already down 6-7 percent if you look at what has happened in the last few weeks?A: I believe that there will be a bit of selling on the rumours buying on the news effect once the news on Brexit is clear. It will have a very regional impact. I think Ireland, Netherlands and Belgium will be suffering most from losing a big client in the UK but otherwise I think it could be beneficial to UK exporters. So, it is not all negative even if it does happen.Q: The other of course event that the world is watching out for is the Fed meeting and then we will hear from the Bank of Japan (BoJ). Are you expecting any significant perhaps body language change from the central banks if not really a rate action itself?A: I don’t there is going to be rate action. They are going to prepare the market to increase in July back to normalisation and it would be good sign that they are able to do so. So, I think that would be a positive signal to look at.Q: So a lot of let say a most of this risk aversion trade that’s playing out is it over or is there more to go?A: I think there will be no business still in the week to come, but then I believe that will be huge buying opportunity since the economic indicators are all pointing more positively these days and I believe that this will be a huge share buying opportunity to go into a summer rally.