Asian stock markets slumped on Wednesday while the British pound hit a new 31-year low. Investors worried about the effect of Britain’s decision to leave the European Union on the U.K. real estate market following the Bank of England governor’s remarks.
Concerns that the U.K.’s decision to leave the European Union might cause a steep slide in the British commercial real estate value and hurt the wider economy pushed the British pound sharply lower overnight. Mark Carney, the Bank of England governor, said that some of the risks to the economy predicted before the referendum had begun to crystalize, including the concern about the skyscrapers, shopping centres and other commercial real estate that have taken in capital from overseas and had become “stretched.”
The Bank of England moved to reassure markets it would avoid a repeat of the 2007-08 financial crisis, freeing up more money for loans to business and households but it could not stop investors from selling the pound.