Too Early to Gauge 'Brexit' Effect on Sales

Management of two major United States equine sales companies say it is too early to tell if the 52%-48% vote in favor of Great Britain exiting the European Union and the resulting drop in currency values will impact upcoming North American yearling sales.

Once the "Brexit" votes were counted, the value of the British pound fell more than 10% against the U.S. dollar between its high of $1.50 late Thursday to the overnight low of $1.32, its lowest since 1985. The vote also had ramifications throughout world financial markets, with the Dow Jones Industrial Average and Standard & Poors 500 both declining by more than 3%.

Fasig-Tipton will conduct a horses of racing age sale July 11 and a selected yearling sale July 12, both in Lexington, to be followed by the Aug. 8-9 selected Saratoga yearling sale and the Aug. 13-14 Fasig-Tipton New York-bred yearling sale, both in Saratoga Springs, N.Y. Keeneland Association then follows with its marathon September yearling sale Sept. 12-24.

"I wouldn't anticipate it having a major impact," Fasig-Tipton president and chief executive officer Boyd Browning Jr said. "Our sales in July and at Saratoga are predominantly an American-based buying population. Obviously there is a lot of volatility in the financial markets today, which is not unexpected given the world we live in. A lot of these ebbs and flows tend to normalize as there is less emotion and more rational thought and planning in the financial markets over time.

"I think there will be some stabilization between now and when the sales occur."

"I think it is too early to have any idea what will happen," Keeneland sales director Geoffrey Russell said. "The initial reaction in the market to the vote has been negative, but I would expect it to stabilize over time. With the British pound dropping precipitously it is a concern. A lot of our major buyers are international traders, so just because the pound has gone down doesn't mean it will affect them. But for the small individual buyer it could have a huge effect."

"I wish I was smart enough to know what is going to happen with currency markets between June 24 and July 12 because if I did I wouldn't have to worry about it," Browning said with a chuckle. "We've already seen the pound dip and hit its low and have some recovery. Don't get me wrong, it had a significant downturn, and if my business was denominated in pounds, clearly it has had an impact today.

"We see market fluctuations and volatility more on a day-to-day basis today than we did 25 years ago, but I wouldn't expect it to have a major impact on yearling sales in North America. But we prefer certainty to uncertainty."