4 Asian Stocks To Buy Despite Brexit Jitters

Markets in Asia got their first taste of Brexit generated volatility when they opened last Friday. The surprise vote in favor of leaving the EU sent shocks through the global financial system as investors braced for what could be a week full of uncertainties ahead.

However, Asian markets have the ability to resist the impact of these events. Additionally, the Federal Reserve’s decision to leave rates unchanged could act as a headwind for the region’s stocks. Adding stocks from Asia to your portfolio makes good sense at this point.

Turbulent Week Ahead?

The outcome of the referendum left most market watchers stunned. Traders and fund managers began preparing for the fallout of the vote on HSBC (HSBC) and other British stocks listed in Asia. Japan’s benchmark Nikkei was the worst sufferer in the initial hours of trading, ultimately ending the day 7.9% lower, marking its steepest one-day fall since the tsunami of 2011.

Shares in China were comparatively more insulated, with the benchmark losing only 1.3% on Friday. By Monday, stocks had staged a rebound with the Nikkei gaining 2.4% and the Shanghai Composite increasing by 1.5%. Markets had stabilized somewhat by Tuesday with the Nikkei gaining 0.1% and the Shanghai Composite ending 0.6% higher.

Resilience to Outweigh Volatility

Traders and market watchers are unanimous that trading will remain volatile this week. Investors will closely watch the outcome of the decision to leave the EU and look for signs of the contagion spreading across other regions. But several factors are working in favor of the Asian markets.

Firstly, events in Europe are likely to have only a limited impact on the region given the lack of dependence on that region. Countries in the region have limited trade volumes originating from Britain. Direct financing from financial institutions based out of the country is also manageable in nature.

Further, the likelihood of the Fed raising rates in the near future has reduced significantly which will aid growth focused stocks in the region. The Fed Chair has already expressed her concerns over the likely fallout of a Brexit and will remain wary of raising rates for a significant part of the year.

1 2 3
View single page >> |

Disclosure: None.

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.