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.