Asian Stocks Climb as Britain Referendum Poll Points to Remain

  • Yen declines against dollar for first time in seven days
  • India central bank head Raghuram Rajan to leave in September

What Are Asian Markets Focused on This Week?

Asian stocks rose the most in two months as a poll showed a tilt in favor of Britain remaining in the European Union just days before the historic vote. Commodity producers rallied with oil and a weaker yen buoyed the earnings outlook for Japanese exporters.

The MSCI Asia Pacific Index climbed 1.8 percent to 128.63 as of 4:37 p.m. in Hong Kong. Japan’s Topix index had its steepest increase in two months as the yen weakened for the first time in seven days. Chinese stocks traded in Hong Kong surged with energy shares among the largest gainers. The first opinion survey taken after the murder of opposition lawmaker Jo Cox showed the campaign for the U.K. to remain in the European Union was gaining momentum.

“We are seeing a risk-on move after the latest Brexit poll,” said Niv Dagan,
executive director at Peak Asset Management LLC in Melbourne. “It may be short-lived and volatility is likely to remain high until Thursday’s vote. This really could still go either way.”

The Topix rose 2.3 percent after capping its worst week since February. Exporters Toyota Motor Corp. and Sony Corp. rallied at least 2.7 percent amid the yen’s retreat. Japanese exports dropped in May for the eighth month in a row, data showed Monday, before a speech by central bank Governor Haruhiko Kuroda.

Australia’s S&P/ASX 200 Index advanced 1.8 percent. BHP Billiton Ltd., the world’s largest mining company, gained 4.4 percent in Sydney. Its Brazilian joint venture with Vale SA is exploring ways to restructure about $1.6 billion in loans.

Hong Kong’s Hang Seng Index advanced 1.7 percent and the Shanghai Composite Index gained 0.1 percent. Taiwan’s Taiex index increased 0.7 percent and South Korea’s Kospi index added 1.4 percent. New Zealand’s S&P/NZX 50 Index gained 0.3 percent and Singapore’s Straits Times Index rose 1.3 percent.

For more on the potential impact of Rajan’s departure, click here.

India’s S&P BSE Sensex Index rose 0.8 percent, tracking gains in Asia and helping to erase initial losses sparked by the central bank Governor  Raghuram Rajan’s weekend announcement that he will be stepping down. Exporters surged as the rupee tumbled, boosting the earnings outlook for companies making sales outside India. Rajan had become a target for Hindu hardliners within Prime Minister Narendra Modi’s party after he commented on issues beyond monetary policy, such as free speech.

Cox’s murder had spurred a temporary halt to campaigning and a marked reduction in bets on a Brexit win. Bookmakers’ odds of the U.K. voting to exit the 28-nation bloc fell to about 32 percent Sunday, with the poll from Survation for the Mail on Sunday newspaper showing 45 percent of people backed the “Remain” camp, while 42 percent supported “Leave.” Central banks are already preparing for the referendum, primed to inject liquidity into markets in the event of capital flight from pound assets.

“The Brexit vote on Thursday is fast approaching and nervousness in financial markets has been building,” said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd., which oversees about $116 billion. “Beyond near-term uncertainties, we still see shares trending higher this year helped by relatively attractive valuations, ultra easy global monetary conditions and continuing moderate global economic growth.”

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