A shocking referendum vote in favor of the United Kingdom leaving the European Union spooked investors in Asia and sent the yen soaring to new highs.
Tokyo’s Nikkei shed 7.9 percent to end at 14,952. Countering the British pound’s nosedive on “Brexit,” the yen is surging as investors consider it a haven currency. A strong yen is bad news for Japan’s export-driven economy and tourist shopping industry. Speculation is mounting that the Bank of Japan will soon intervene.
The yen, which had already been gaining in value for months, was up 1.8 percent against the dollar in late Friday trade and is currently trading at 103 to the dollar.
“Solo [forex] intervention by Japanese authorities at the current level around 100 is still unlikely…further appreciation of [the yen] to the 95 level against [the dollar] would be necessary for Japan to embark on [forex] intervention, in our view,” Nomura’s forex analysts wrote in a research note.
Other Asian markets saw more modest drops. Hong Kong’s Hang Seng slid 2.9 percent to finish at 20,259. Shanghai’s SSE lost 1.3 percent to end at 2,854. Australia’s S&P/ASX 200 slid 3.2 percent to end at 5,113.
Many retail stocks took a beating. In Tokyo, Fast Retailing slumped 10.4 percent to end at 26,295 yen. Isetan Mitsukoshi shed 9.7 percent of its value to end at 943 yen. Matsuya lost 9.4 percent to finish at 692 yen. Shiseido lost 5.1 percent to close at 2,540 yen.
In Hong Kong, the slides were less pronounced for most stocks. Esprit shed 6.7 percent to finish at 5.60 Hong Kong dollars while Global Brands slid 4.3 percent to end at 0.67 Hong Kong dollars. Prada slid 2.5 percent to land at 25 Hong Kong dollars. Trinity, which issued a profit warning on Wednesday, lost 7.3 percent to close at 0.510 Hong Kong dollars.
Chow Tai Fook was the outlier. It gained 3.1 percent to end at 5.36 Hong Kong dollars.