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World

Property funds freeze £18b in Brexit panic

Opening sequence

Opening sequence

World

Property funds freeze £18b in Brexit panic

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17:45
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COMING UP:Property funds freeze £18b in Brexit panic

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Transcript

00:00:01
>> If you want to get to your ISA or pension in the UK right now, there's a strong chance that you can't. Popular commercial property funds or at the center of a post Brexit market crisis. Seven funds worth 18 billion pounds are now refusing savers access to their cash, making it the biggest freeze since the 2008 financial crisis.
00:00:21
Reuters chief European funds correspondent, Simon Jessup, says that leaves over half the UK sector in hot water, and it might take them a while to get out.>> Well, this latest market eruption has once again drawn attention to the inherent liquidity mismatch. You've got property, bricks and mortar which can take many months to sell.
00:00:45
Packaged in a fund and sold to retail investors on the promise that you can get your money back on a daily basis. It could be two, three, four months. I think at the height if the crisis some funds were gated for six months. It wouldn't be a surprise to see that structure, the rules around that structure changed going forward.
00:01:01
>> Among those closing are Henderson, M&G, and Standard Life. Those funds who haven't altogether suspended trading have cut their values. The Bank of England and Governor Carney see commercial property as a key risk to UK financial stability. Now, investors are worried about the broader financial system.>> Well, the big question at the moment is, is this an isolated incident?
00:01:23
Or is it as in 2008, seven, eight, nine. Is it going to lead to a broader panic? As in it currently stand most in the market don't think that will happen.>> Some officials are hopeful of these might see seven frozen funds as an unlucky number. And it could get unluckier still, if more of the UKs 50 or so similar funds close the door on withdrawals as Brexit uncertainty takes hold.
00:01:48
If not a crisis yet, some of the more pessimistic observers are calling it the earlier signs of one.