A U.K. vote to leave the European Union could see the FTSE 100 fall by over 10 percent in the next year, according to an analyst at UBS Wealth Management.
Caroline Simmons, deputy head of the U.K. investment office at UBS, said the shares of the U.K. benchmark could vary by over 15 percent in a 12-month period depending on the outcome of the EU referendum, which is being held on June 23.
If the U.K. votes to stay in the EU, the large cap index could see a rise of up to 5 percent as markets will start to see a return of business confidence, Simmons said in a statement. However, she warned that markets are at risk of seeing massive volatility if U.K. votes to exit the EU.
"The stock market valuation could drop closer towards valuations seen during the 2012 euro crisis, but this would be cushioned by an 8 percent boost to earnings from the weakness we foresee in the pound. If on the other hand the U.K. votes to remain, the FTSE 100 could rise by up to 5 percent over 12 months, with further upside capped by pound strength," Simmons said, adding that sterling-dollar could to fall to 1.25 and sterling-euro to 1.20.