The stock market rebounded Monday from hefty losses fueled by Britain’s decision to leave the European Union, despite fears of months of uncertainty.
The Philippine Stock Exchange Index surged 86.18 points, or 1.1 percent, to 7,715.90 on a value turnover of P6.8 billion. Gainers beat losers, 120 to 74, with 38 issues unchanged.
Ayala Land Inc., a major builder, climbed 3.1 percent to P39.40, while SM Prime Holdings Inc., the biggest integrated property developer, gained 2.1 percent to P26.20.
BDO Unibank Inc., the largest lender in terms of assets, rose 2.8 percent to P110, while Semirara Mining and Power Corp., the biggest coal producer, advanced 5.1 percent to P123.
The sterling, meanwhile, plunged two percent in early Asian trading before paring losses as dealers rushed into safe assets, although Japan’s Nikkei stock index rallied. Britain’s finance minister George Osborne looked to reassure markets, saying the economy was in rude health.
The surprise Brexit decision wiped $2.1 trillion off market valuations Friday and sent the pound slumping to a 31-year low against the dollar.
The pound bought $1.3440, down from $1.3670 in New York and heading back towards the $1.3229 touched Friday, which was its lowest level since 1985.
Stephen Innes, senior trader at OANDA Asia Pacific, warned sterling “is extremely vulnerable” and predicted an interest rate cut in the summer.
He also said there was “a huge concern that London’s status as the global financial capital will crumble” if it losses its “passporting” rights, which permit banks to locate themselves in the UK while offering products and services in the wider EU.
Investors were also shifting out of other higher-yielding riskier currencies, which took a hammering last week.
South Korea’s won fell 0.3 percent, the Australian dollar slipped 0.7 percent and the Singapore dollar shed 0.2 percent. Malaysia’s ringgit slipped 0.3 percent and the Philippine peso 0.2 percent.
China weakened the yuan’s fixing almost one percent to a five-and-half-year low against the dollar, in the biggest downward move since August’s devaluation.
But on equities markets the Nikkei in Tokyo ended up 2.4 percent—having plunged nearly eight percent Friday—while Shanghai added 1.5 percent and Sydney gained 0.5 percent. There were also gains in Wellington and Bangkok.
Hong Kong rose 0.1 percent in the afternoon.
However, Seoul was 0.1 percent lower and Singapore lost 0.4 percent, while in early European trade London fell 0.8 percent, Frankfurt shed 0.4 percent and Paris 0.3 percent.
There are fears the shock vote will usher in another global market rout just months after a China-fueled sell-off at the start of the year.
Morgan Stanley economist Chetan Ahya tipped a new round of monetary easing in Asia to limit the fallout.
“We think near-term focus of policymakers will be to mitigate adverse impacts on financial conditions. Specifically, we expect policymakers to introduce liquidity injections measures.
“Once the constraint of volatile capital flows and tighter liquidity conditions is lifted, central banks should move to cut interest rates, although we do not expect an aggressive response.” With AFP
