By Jennifer Ablan
NEW YORK (Reuters) - Jeffrey Gundlach, chief executive officer of DoubleLine Capital, said on Friday he thinks Britain will "Bremain" in the European Union and if investors agree they should buy beaten-down European equities.
"I’ve never believed in an exit, or 'Brexit,'" said Gundlach, known on Wall Street as the "Bond King" who manages $100 billion (£69.66 billion) at Los Angeles-based DoubleLine Capital. Britain will hold a referendum on June 23 on whether the country will leave the European Union, a process often referred to as Brexit.
Gundlach, who manages the $60.3 billion DoubleLine Total Return Bond Fund, reiterated that polls reflect people's complaints and frustrations rather than the actions they will actually take. "When it comes up for a vote, I think it will fail," he said.
U.K. equity funds posted net withdrawals of $1.1 billion in the week to June 15, the second-highest outflow on record, as a result of the uncertainty over the vote, Bank of America (NYSE:BAC) Merrill Lynch said on Friday.
Sterling and bond yields rose on Friday as traders tried to assess how the killing of a pro-EU British lawmaker will change the balance of opinions in Britain's impending referendum.
Gundlach said in an interview about Jo Cox, a British member of parliament who was shot dead Thursday: "I think the markets are absorbing the increased probability of a ‘Remain’ vote - Bremain. It just is not good when political things start to go in this violent direction."
If Britain leaves the 28-country bloc there are concerns it would cause turmoil in the global economy and European politics. The potential exit rattled markets and caused the pound to tumbled earlier this week.
Gundlach has been known for a number of very prescient investment calls. He was one of the first heavyweight investors to publicly raise red flags about the credibility of major central banks, including the U.S. Federal Reserve, as countries struggle to manage economic growth.
Just a day before the Fed held short-term interest rates steady and lowered projections of how much they’ll raise them in the coming years, Gundlach told Reuters that "central banks are losing control and they don't know what to do."
Gundlach added on Friday that a Donald Trump presidential win would be good for the stock market. "I’ve said all along, stocks will fall this summer on a Trump 'global growth scare' and then rally into his presidency on a deficit-based GDP bump."