Asia Minute: “Brexit” Brings a Mixed Picture to Asian Economies and Markets
Financial markets in Asia began the week with a more measured view of events in Britain than the US stock market. Some of the larger equity markets even began the week with strong gains, while currency markets have had a more complicated reaction. HPR’s Bill Dorman has details in today’s Asia Minute.
When it comes to big money in Asia, it’s still early to fully evaluate the implications of Britain’s exit from the European Union. After steep sell-offs last week, stock markets across Asia have generally calmed down a bit.
Tokyo even began the week with a gain of nearly 3% on its main Nikkei index….while China’s Shanghai Composite was up about half that much.
Markets in currencies carry more nuances. For example, some investors have seen the Japanese yen as a “safe haven” from volatile currencies of emerging markets. By comparison, that’s made the yen more valuable—or “stronger.” And while that stretches the buying power of a Japanese tourist in Waik?k?, it also raises the cost of a car exported from Japan—hitting the profitability of Japanese automakers.
When it comes to the effects on broader economies, Morgan Stanley has some projections for Asia. Overall, the bank says Hong Kong, Singapore, and Malaysia are the “most exposed” in the region to the lingering negative impact of Britain’s vote to leave the EU. All three are former British colonies.
In a report this week, Morgan Stanley economists say Thailand, Indonesia, Taiwan, Korea and China are “moderately exposed” to potential turmoil….while India and the Philippines are the “least exposed.”