Brexit: Expect the unexpected in Asia

Financial and psychological tremors likely to impact Asia beyond just trade links.

While Britain may be rejecting a supranational political structure, investors and borrowers in Asia can ill afford to ignore potential contagion from interconnected markets.

As Asia braces for yet another summer of extreme market volatility, contagion could come from the yen’s tendency to strengthen in times of turmoil, a slowdown in growth as Brexit uncertainty saps trade with Europe and a flight to the US dollar from Asian currencies.

“We caution not to underestimate the depth and reach of financial market contagion to Asia,” said Nomura strategists in a note to clients as they trimmed their 2016 GDP growth forecast for Asia ex-Japan from 5.9% to 5.6%....

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