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Briefing highlights

  • Ontario has most at risk in Brexit vote
  • Stocks, pound surge on new Brexit polls
  • Video: Can you protect your job from robots?

More at risk

As Jennifer Lee puts it, it’s “going to be a nail-biter.”

The BMO Nesbitt Burns senior economist was, of course, referring to Thursday’s Brexit vote, noting that “market watchers are becoming increasingly panicky as the June 23 EU referendum looms and the polls continue to point to a very tight race.”

There’s certain to be at least a knee-jerk reaction in the markets when the results roll in. As The Globe and Mail’s Tim Shufelt writes, investors are bracing themselves.

Where analysts differ is on what could follow over the longer run where analysts differ, some pointing to ripples through the global economy and others saying that, over the longer run, there’s little to fear.

Here are just two views of how a ’Vote Leave’ victory could affect Canada’s economy.

Ontario is particularly exposed, warned Warren Lovely, National Bank’s head of public sector research and strategy, as these charts illustrate.

First, weaker economic growth in Britain, which could follow quitting the European Union, could affect Ontario exports. Then there’s the less direct “linkages” of financial services.

“Anything that threatens to destabilize a global financial centre (in this case, London) could have knock-on effects across the globe,” Mr. Lovely said.

“Whether its exports or the relative importance of financial services, exposures vary notably across Canada’s provinces,” he added.

“Little wonder that Ontario’s Finance Minister has endorsed a strong, united EU.”

As Mr. Lovely sees it, Canada is not “at the top of the charts” when it comes to exposure to the British economy, given that just 3 per cent of exports head to the U.K. and about 7 per cent to the broader European Union.

“Still, the U.K. is Canada’s third-most important export market, and at $25-billion/year, the bilateral two-way merchandise trade relationship is nothing to sneeze at,” Mr. Lovely said.

“True, a Brexit could see other EU nations take in more imports from Canada, as some may wish to make an example out of Britain in order to deter others from following suit,” he added.

“Still, a prospective slowing in the already torpid pace of global growth following a Brexit is hardly welcome news for a small open economy like Canada.”

Benjamin Tal, deputy chief economist at CIBC World Markets, suggests a Leave vote would be nothing more than one of those fear-and-loathing events that end up with little far-reaching impact like Y2K.

Not only is trade with the U.S. and Canada small in percentage terms, the U.K. “represents a relatively small share of S&P and TSX revenues and has very limited impact on the trajectory of emerging markets,” he said.

“A relief rally is guaranteed if a Remain vote prevails,” Mr. Tal added.

“But even in the case of a Leave victory, the initial sell-off should provide some interesting buying opportunities. Markets will realize that beyond the rhetoric, Brexit is nothing more than another Y2K.”

Stocks rise

Stocks rose today, as did the British pound, amid the latest Brexit polls.

“The pound gained past 2 per cent against the U.S. dollar ... as three opinion polls out of six showed there was a shift toward the ‘stay camp,’” said London Capital Group market analyst Ipek Ozkardeskaya.

Tokyo’s Nikkei climbed 2.3 per cent, Hong Kong’s Hang Seng 2.4 per cent, and the Shanghai composite 0.1 per cent.

In Europe, London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were up by between 3 and 3.5 per cent, while North American markets also rose.

Of course, no one knows what the next polls will show.

“Despite a cheerful start, the enthusiasm in the pound and the U.K. markets could well be a flash in the pan,” Ms. Ozkardeskaya said.

“As the U.K. steps into the crucial Brexit week, we are prepared for two-sided volatility and choppy market conditions,” she added.

“The June 23 referendum could be the final chapter of the Brexit story or the beginning of a new era.”

Canpotex scraps plans

Canpotex is scrapping plans for a new export terminal in B.C.

The Canadian group, the exporting arm of major producers such as Potash Corp. of Saskatchewan and Agrium Inc., said it already has “efficient” export facilities in Vancouver, Saint John and Portland, Ore.

“The decision was made after careful deliberation of Canpotex’s current and anticipated terminal capacity needs, and the options we have to meet those needs,” Canpotex chief executive officer Ken Seitz said in a statement Friday.

Canpotex had partnered with Canadian National Railway in the proposed project.

Couche-Tard in deal

Alimentation Couche-Tard Inc. continues its growth trajectory in Europe with a deal to buy 23 convenience stores and fuel stations in Estonia, The Globe and Mail’s Bertrand Marotte reports.

Laval, Que.-based Couche-Tard said today it has struck an agreement to acquire the majority of the assets operated under the Premium 7 brand from Sevenoil Est OU and its affiliates.

Stat of the day

$45.6-billion
Size of Canada's underground economy in 2013, about 2.4% of GDP, according to Statistics Canada today

Video: Can you protect your job from robots?

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