Brexit Tremors Hit Asia: Yen Soars as Nikkei Collapsed 7.9%, JGBs at Record Low Yields while the Offshore Chinese Yuan Crashed!

Brexit tremors hit the Asian financial markets

chart from CNBC

From Bloomberg:

Asian stocks headed for the steepest slump in 10 months as Britain’s vote to leave the European Union stunned investors, raising concern that a divided Europe will further damage global growth.

The MSCI Asia Pacific Index fell 4.1 percent to 124.69 as of 4:03 p.m. in Hong Kong. Japan’s Topix plunged the most since 2011 and S&P 500 Index futures sank 3.3 percent. The U.K. voted to quit the EU after more than four decades in a rejection of the continent’s postwar political and economic order, prompting Prime Minister David Cameron to resign and pressuring markets around the world.

The Hang Seng Index lost 2.9 percent, paring declines of as much as 5.8 percent. HSBC Holdings Plc, which gets a third of its revenues from Europe and has the second-biggest weighting on the Hong Kong stock gauge, sank 6.6 percent. South Korea’s Kospi tumbled the most since May 2012 and Australia’s S&P/ASX 200 Index fell 3.2 percent. Volumes Friday were at least 63 percent above average in Japan, Hong Kong and Australia.

The debate over Britain’s future dominated trading in June, with anxiety over the economic impacts of a Brexit, and the boost it could give to anti-establishment sentiment globally, stoking market volatility around the world.

This chart from Bloomberg shows how Brexit via the Pound-USD has recently developed high correlations with actions of the global stock market

And the yen soared as Japanese stocks collapsed.

Yen Soars

The Topix plunged 7.3 percent, the most in Asia. The gauge is down 22 percent already in 2016. Brexit fear has pummeled Japanese stocks more than other markets amid concern a vote to leave the EU could push investors into haven assets such as the yen. The currency soared past 100 per U.S. dollar for the first time since November 2013. Morgan Stanley had warned that losses on the Topix will be bigger than elsewhere in Asia should Britain opt to leave the EU.

Today’s 8% crash has brought the Nikkei back to the February 2016 lows. 

Eerily for the Nikkei, both trading session saw a similar closing price at 14,952.

Of course, it was more than just about crashing stocks and the soaring yen.

Negative yields of Japanese government bonds hit a new low!

From another Bloomberg report

Japan’s negative bond yields plunged to unprecedented depths as a rallying yen and plunging stocks added to speculation the Bank of Japan will step up stimulus.

The U.K.’s vote to leave the European Union rocked global markets, prompting a flight to safety that cut the 10-year Japanese government bond yield to a record minus 0.215 percent. That on 30-year debt dropped to an unprecedented 0.125 percent, as Japan’s currency surged as much as 7 yen against the dollar and the Topix index of shares tumbled more than 7 percent.

To add salt to injury, China's offshore yuan also crashed!

Knee jerk reaction? 

Or has Brexit extrapolated to the opening of Pandora's Box?