Pound tumbles, most markets extend losses on Brexit woe

HONG KONG: The pound sank Monday to 30-year lows while most stock markets tumbled following Britain's decision to leave the European Union, with traders fearing it will lead to months of uncertainty.

Sterling plunged two percent in early exchanges as dealers rushed into assets considered safe, such as the yen and gold, although Japan's Nikkei stock index rallied after suffering a battering on Friday.

The surprise decision wiped $2.1 trillion off market valuations Friday and sent the pound slumping to a 31-year low against the dollar.

But while it recovered marginally as Friday wore on -- helped by promises of financial market support from major central banks -- the pound resumed its losses in early Asian business.



It bought $1.3386, 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 EU.

Investors were also shifting out of other higher-yielding, riskier currencies, which took a hammering last week.

South Korea's won fell 0.6 percent, the Australian dollar slipped 0.7 percent and the Indonesian rupiah shed 1.1 percent. Malaysia's ringgit dived 0.8 percent and the Philippine peso one 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.

On equities markets Hong Kong shed one percent, Seoul was 0.5 percent lower and Wellington lost 0.1 percent. There were also losses in Singapore, Manila, Jakarta and Taipei.

However, the Nikkei stock index in Tokyo was up 1.4 percent by lunch, having plunged nearly eight percent Friday, while Shanghai added 0.6 percent and Sydney gained 0.3 percent.

There are fears the shock vote will usher in another rout on global markets just months after a China-fuelled sell-off that scythed through the value of shares at the start of the year.



James Audiss, senior investment adviser at Shaw and Partners in Sydney, warned the week could see some sharp losses across markets,"It's going to be a very tough week. Unless an investor has a really strong view one way or the other, you'd be brave to buy in. It will be a really volatile week and people are scared to position into things."

Investors will be closely watching events in Britain over the next few weeks after Prime Minister David Cameron said he will step down in the autumn, while the leader of the opposition Labour Party is also facing calls to resign.

Finance minister George Osborne, who has been silent since the result, will try to reassure markets, with growing fears Scotland will hold another vote on whether to leave the United Kingdom.

EU leaders have called for a quick break as they look to prevent eurosceptics in other member states from calling referendums that could imperil the six-decades-old alliance.