Britain's vote to leave the European Union surprised global markets because investors underestimated how people around the world are diverging from the "political and business elites," Allianz Chief Economic Adviser Mohamed El-Erian told CNBC ON Friday.
In a "Squawk Box" interview, El-Erian called the Brexit vote "historic and consequential."
While levered long investments still need to unwind, leading to sharp market movements ahead, the former co-CEO of Pimco said, "There will also be opportunities for those who have cash in the days and weeks ahead."
El-Erian advised investors to look for companies with "strong balance sheets and positive cash flow." He said there are quite of few opportunities, including in tech.
As far as the fallout from Thursday's Brexit vote, El-Erian said, "This is going to embolden a lot of the anti-establishment parties [in Europe]."
While El-Erian says the EU will do fine in the long term, the short term looks rocky. "You're going to have a lot of political uncertainty, and that's going to lead to financial uncertainty. And also, there's an economic hit coming because you're changing institutional relationships."
Despite the sharp drop in bank stocks on concerns of a chilling effect on investment from a Brexit, El-Erian said: "I wouldn't rush into the financials right now." He said there's too much uncertainty in the near term about what the new EU would look like.