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Asian Shares Plummet As UK Votes To Exit

Markets 111714 24Jun16

Asian shares plunged on Friday as recent optimism that the U.K. will remain a part of the European Union proved futile. Risk assets were scorched and safe-haven assets such as treasuries, yen and gold came back into the limelight as Britain's historic European Union referendum suggested a stronger than expected performance by the 'Leave' campaign.

The British pound plunged against the US dollar to a 31-year low as the results of the referendum showed that 51.9 percent of the people favored leaving the union as opposed to 48.1 percent, who chose to stay in the union.

British Prime Minister David Cameron, who frantically campaigned for a 'stay' in the union, has resigned saying the will of the people must be respected.

Chinese shares showed limited reaction to the carnage in stock markets across Asia, with the benchmark Shanghai Composite closing down 37.67 points or 1.30 percent at 2,854,29 due to tighter control on capital outflows. Hong Kong's Hang Seng index was down 787.31 points or 3.77 percent at 20,081.

Japan's Nikkei index fell 1,286.33 points or 7.92 percent to 14,952.02, its steepest drop since March 2011, as the EU referendum results sent the yen soaring above 100 to its highest level in 21/2 years. The broader Topix index also fell the most in five years, closing 7.26 percent lower at 1,204.48.

Exporters bore the brunt of the selling, with Honda Motor, Nissan, Panasonic, Sony and Mazda Motor tumbling 8-11 percent. Sharp Corp plunged 16.4 percent on news it will be moved to the second section of the Tokyo exchange from the first section.

Financials Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial lost 6-9 percent while energy stocks Inpex, JX Holdings and Japan Petroleum retreated 6-9 percent.

Australian shares reversed early gains to hit a 10-week low, with all sectors closing in the red. The benchmark S&P/ASX 200 fell 167.50 points or 3.17 percent to 5, 113.20.

Energy stocks Woodside Petroleum, Santos, Origin Energy and Oil Search lost 3-5 percent after benchmark U.S. crude prices plummeted 6 percent during early trading Friday. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group plunged 6-8 percent.

The big four banks closed 3-4 percent lower and investment bank Macquarie Group plummeted 7 percent as Britain faced an uncertain future outside the European Union. Gold Miners Newcrest, Regis Resources, Norther Star Resources and Evolution Mining soared 8-12 percent as gold futures surged past $1,300 to multiyear highs on safe-haven demand.

South Korea's Kospi average dropped 61.47 points or 3.09 percent to 1,925.24, marking its biggest single-day loss of the year. The local currency fell by the most in almost five years as investors braced for repercussions from Britain's exit from the European Union.

"The government will be ready to take pre-emptive measures to stabilize the markets if excessive and sudden volatility arises," Financial Services Commission Chairman Yim Jong-yong said in a statement.

New Zealand's S&P/NZX-50 index tumbled 153.57 points or 2.25 percent to 6,667.78, with financials hit hard after Britons voted to leave the European Union.

Australia & New Zealand Banking Group, Westpac and Heartland Bank fell 4-5 percent, while A2 Milk, which is suing Australia-based food and beverage company Lion Pty over protein claims, slumped 7.1 percent.

Xero slumped 8.1 percent after research house Morningstar put its fair value estimate for the stock at $21 a share.

Elsewhere, benchmark indexes in India, Indonesia, Malaysia, Singapore and Taiwan were down 1-3 percent.

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