Asia markets in tailspin after Brexit vote, pound tumbles

Reading Time: 2 minutes

Brexit Asia stocksThe United Kingdom’s vote to leave the European Union sent shock waves across Asian markets on June 24 as regional investors were the first to react after the result became clear.

Tokyo’s benchmark stock index Nikkei 225 nosedived almost 8 per cent at closing, sparked by an avalanche of selling and wild swings on currency markets. Initially, the market had opened in positive territory on bets that the UK would choose to remain in the 28-nation bloc.

But those hopes quickly faded when the ‘Leave’ result was out, sending the pound into a down spiral and pushing the yen to its highest in more than two years – a negative for Japanese shares with Japanese exporters among the main losers.

Among them, Toyota ended 8.66 per cent lower, Sony dropped 8 per cent, banking giant Mitsubishi UFJ Financial Group tumbled 8.56 per cent to 470 yen and Uniqlo operator Fast Retailing, a market heavyweight, tumbled 10.38 per cent.

In South Korea, the Kospi index closed 3.1 per cent lower, while Australia’s ASX/200 finished the day 3.2 per cent down. In China, the mainland Shanghai Composite was down 1.3 per cent, while Hong Kong’s Hang Seng was down sharply 4.2 per cent. Singapore’s Straits Times Index dropped 2.09 per cent, and Mumbai’s Sensex in India also fell by 3.6 per cent.

Elsewhere, Thailand’s SET was down 1.62 per cent, the Philippines PSE dropped 1.29 per cent, while Bursa Malaysia’s KLCI remained almost stable at -0.36 per cent.

The situation in Europe was bleaker: At the opening, London’s FTSE-100 index was down 5 per cent, with banking stocks Royal Bank of Scotland, Barclays and Lloyds all losing close to a quarter of their market value.

In the eurozone, the Paris CAC-40 index fell by over 10% per cent, and financials giants BNP Paribas and Credit Agricole plunged by 17 per cent, while Société Générale dropped 21 per cent. Frankfurt’s DAX index dropped by over 10 per cent at one point, before recovering somewhat to a 7-per cent decline. Banking stocks Deutsche Bank and Commerzbank both plummeted by over 16 per cent. Among smaller European exchanges, Madrid fell nearly 12 per cent at opening, Athens by 15 per cent, Amsterdam nearly 9 per cent, Prague 10 per cent, Vienna 7 per cent and Warsaw by nearly 8 per cent.

The pound plunged around 6 per cent against the euro, almost 9 per cent against the US dollar (at some point to around $1.323, its weakest level since 1985), more than 8 per cent against the yuan and a whopping 13 per cent against the yen. This is particularly painful for expats on a pound-linked, but not value-adjusted salary in places like Tokyo, Singapore or Shanghai, as well as in Hong Kong whose currency is pegged to the US dollar, but even so for retirees living on a pound pension in Southeast Asia, namely in Thailand, Malaysia, Cambodia or the Philippines.

Below the loss in value of the pound towards major ASEAN currencies as of June 24 (half during the day’s trading):

Thai baht:  >-8%
Malaysia ringgit: >-5%
Singapore dollar: >-7.5%
Philippine peso: >-8%

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The United Kingdom's vote to leave the European Union sent shock waves across Asian markets on June 24 as regional investors were the first to react after the result became clear. Tokyo's benchmark stock index Nikkei 225 nosedived almost 8 per cent at closing, sparked by an avalanche of selling and wild swings on currency markets. Initially, the market had opened in positive territory on bets that the UK would choose to remain in the 28-nation bloc. But those hopes quickly faded when the 'Leave' result was out, sending the pound into a down spiral and pushing the yen to...

Reading Time: 2 minutes

Brexit Asia stocksThe United Kingdom’s vote to leave the European Union sent shock waves across Asian markets on June 24 as regional investors were the first to react after the result became clear.

Tokyo’s benchmark stock index Nikkei 225 nosedived almost 8 per cent at closing, sparked by an avalanche of selling and wild swings on currency markets. Initially, the market had opened in positive territory on bets that the UK would choose to remain in the 28-nation bloc.

But those hopes quickly faded when the ‘Leave’ result was out, sending the pound into a down spiral and pushing the yen to its highest in more than two years – a negative for Japanese shares with Japanese exporters among the main losers.

Among them, Toyota ended 8.66 per cent lower, Sony dropped 8 per cent, banking giant Mitsubishi UFJ Financial Group tumbled 8.56 per cent to 470 yen and Uniqlo operator Fast Retailing, a market heavyweight, tumbled 10.38 per cent.

In South Korea, the Kospi index closed 3.1 per cent lower, while Australia’s ASX/200 finished the day 3.2 per cent down. In China, the mainland Shanghai Composite was down 1.3 per cent, while Hong Kong’s Hang Seng was down sharply 4.2 per cent. Singapore’s Straits Times Index dropped 2.09 per cent, and Mumbai’s Sensex in India also fell by 3.6 per cent.

Elsewhere, Thailand’s SET was down 1.62 per cent, the Philippines PSE dropped 1.29 per cent, while Bursa Malaysia’s KLCI remained almost stable at -0.36 per cent.

The situation in Europe was bleaker: At the opening, London’s FTSE-100 index was down 5 per cent, with banking stocks Royal Bank of Scotland, Barclays and Lloyds all losing close to a quarter of their market value.

In the eurozone, the Paris CAC-40 index fell by over 10% per cent, and financials giants BNP Paribas and Credit Agricole plunged by 17 per cent, while Société Générale dropped 21 per cent. Frankfurt’s DAX index dropped by over 10 per cent at one point, before recovering somewhat to a 7-per cent decline. Banking stocks Deutsche Bank and Commerzbank both plummeted by over 16 per cent. Among smaller European exchanges, Madrid fell nearly 12 per cent at opening, Athens by 15 per cent, Amsterdam nearly 9 per cent, Prague 10 per cent, Vienna 7 per cent and Warsaw by nearly 8 per cent.

The pound plunged around 6 per cent against the euro, almost 9 per cent against the US dollar (at some point to around $1.323, its weakest level since 1985), more than 8 per cent against the yuan and a whopping 13 per cent against the yen. This is particularly painful for expats on a pound-linked, but not value-adjusted salary in places like Tokyo, Singapore or Shanghai, as well as in Hong Kong whose currency is pegged to the US dollar, but even so for retirees living on a pound pension in Southeast Asia, namely in Thailand, Malaysia, Cambodia or the Philippines.

Below the loss in value of the pound towards major ASEAN currencies as of June 24 (half during the day’s trading):

Thai baht:  >-8%
Malaysia ringgit: >-5%
Singapore dollar: >-7.5%
Philippine peso: >-8%

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