Asia Stocks Tumble as Brexit Concern Spurs Move to Safety Assetsby
MSCI Asia Pacific Index heads for biggest drop since April
Topix sinks most in four months as yen jumps on haven demand
Stocks sank from Japan to China, with Asia’s benchmark index poised for its biggest decline since April, as uncertainty ahead of central bank meetings and a vote on the U.K. leaving the European Union boosted demand for haven assets.
Benchmark indexes in Tokyo and Shanghai tumbled more than 3 percent for the biggest declines since February. The MSCI Asia Pacific Index slumped 2 percent to 127.51 as of 4:05 p.m. in Hong Kong as historical 10-day price swings jumped to an April high. Volatility is surging as investors grow cautious before meetings of the Federal Reserve and Bank of Japan this week, followed by next week’s vote on Britain’s membership in the European Union, which could roil markets.
“Everything has been hijacked by the U.K. vote,” Ken Peng, a Hong Kong-based Asia investment strategist at Citi Private Bank, said by phone. “It’s very difficult to convince anyone to have conviction before the vote happens. This spells more uncertainty for the EU for many years to come if Brexit happens.”
Japan’s Topix index tumbled 3.5 percent as the yen jumped 0.8 percent as the potential for Brexit fueled demand for safe haven assets. A gauge of volatility on the Nikkei 225 Stock Average jumped the most in four months. Short-selling of shares on the Tokyo Stock Exchange surged to 47.1 percent on Friday, the highest in records going back to 2008, according to exchange data compiled by Bloomberg.
The Shanghai Composite Index sank 3.2 percent and the Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong extended its two-day slump to 4.5 percent, the most since February. China’s fixed-asset investment in the first five months of 2016 trailed 38 economists’ forecasts, official data showed Monday.
The losses for mainland shares come before MSCI Inc.’s decision later this week on whether to add yuan-denominated shares to its global indexes. The Shanghai gauge has dropped 20 percent so far this year and is among the world’s worst-performing equity benchmarks.
“The risk-off stance will continue this week ahead of a multitude of events,” Bernard Aw, a strategist at IG Asia Pte in Singapore, said by phone. “The Fed and BOJ meetings as well as the Brexit vote next week will set the tone for financial markets. With the World Bank recently flagging a slower global growth outlook for 2016, investors are also on the lookout for monetary support and fiscal stimulus from major economies.”
Taiwan’s Taiex index slid 2.1 percent. India’s S&P BSE Sensex index was poised for the steepest three-day drop since May 2. South Korea’s Kospi index sank 1.9 percent, the largest decline since Feb. 11. New Zealand’s S&P/NZX 50 Index slipped 0.7 percent. Australia is closed for a holiday. Hong Kong’s Hang Seng Index sank 2.5 percent and. Singapore’s Straits Times Index slipped 1.3 percent.
Inpex Corp. declined 5.8 percent in Tokyo, pacing losses among energy producers, as crude fell a third day. Japanese exporters dropped, with Honda Motor Co. and Sony Corp. each sliding 4 percent amid concern a stronger yen will crimp their overseas earnings. Nanya Technology Corp. tumbled 9 percent in Taipei as Macquarie Group Ltd. downgraded the maker of memory chips after Micron Technology Inc. said last week it will delay the acquisition of Nanya unit Inotera Memories Inc., which slumped 9.9 percent.
Futures on the S&P 500 Index fell 0.2 percent. The U.S. equity benchmark index dropped 0.9 percent on Friday, with losses intensifying following fresh poll results favoring an exit in Britain’s European Union referendum. Energy producers led the slide, capping their worst session in five weeks, while banks sold off for a second day as Treasury yields continued to drop.
West Texas Intermediate crude for July delivery fell 0.9 percent after slumping 4.2 percent on Friday and Thursday. Oil is extending losses as the number of rigs drilling for oil in the U.S. rose for a second week.