Asian stocks turn sluggish amid uncertainty

Tokyo: After Brexit vote, uncertainty is still looming over the Asian markets as stocks on Monday fell. The British pound tumbled over two percent as markets were grappled with deep uncertainty sparked by Britain’s decision to leave the European Union. Japan and Chinese markets gained, while other indices were trading in negative zone or on weak note.

Nikkei index rose 2.29 percent to 15,294.65 points. Chinese shares advanced as the CSI 300 index CSI300 and the Shanghai Composite SEC both up about 0.8 percent. Hang Seng index eased 0.49 percent to 20,160.72 points. BSE Sensex and Nifty marginally lower in a sluggish trading.

Extending Friday’s sharp losses caused by Britain’s decision to leave the European Union, the benchmark BSE Sensex dropped around 99 points in early trading on sustained selling by funds and retail investors.

After opening at 26,342 points, BSE Sensex rose to 26,435.71 points high at 9:45am before touching 26,341 points low at 10:15 am. The market bellwether was trading at 26,379 points at 11:25am. NSE Nifty was trading almost flat at 8,086.30 points, 0.03 percent lower.

All the sectoral indices led by realty, metal and capital goods were in the red. Sentiment remained weak in the wake of the volatility during the early session. But, it was a far cry from the turmoil seen on Friday when the shock of Britain’s exit vote drove global stocks to their biggest decline in nearly five years.

Market analysts feel that things are so uncertain that investors still do not have a clear idea how much of their risk assets they need to sell.

But, it is safe to assume investors are not yet done with all the selling they need to. Analysts further forecast that there may be another 10 percent fall in share prices.

Among many questions Brexit triggered are just how much UK and European economies will slow, how the EU and Britain will negotiate their new relationship, and what European leaders will do to shore up the crumbling union. The US Dow Jones Industrial Average tumbled 3.39 per cent in Friday’s trade.

US S&P mini futures ESc1, the world’s most traded stock futures, fell 0.3 percent to 2,012.25, hovering near Friday’s 3-1/2 month low of 1,999. lower 0.05 percent at 26,385.15 points.

Financial stocks led the selling pressure in Australia and Hong Kong markets. The financial sector seen the among worst hit by Brexit if the City of London’s investment products and services lose their prized ‘EU passports’ allowing them access to the single market.

Financial analysts hold a view that Brexit could just be the first surprise in a re-calibration of the world away from globalization towards more inward-looking policymaking.

Brexit has now possibly opened up more uncertainty about the European Union project, and the already beaten down Asian and emerging markets equity markets could receive asset allocation flows from Europe.

Brokers said that Friday’s deep losses at the US markets led to a further slide in the Sensex. Investors and sustained foreign fund outflows continued their selling in the domestic markets.