Asian markets were belted yesterday as fears over the Brexit referendum intensified following fresh signs that support for the "leave" camp may be rising.
Recent surveys suggested that opinion has turned more favourable towards Britain leaving the European Union.
A poll by The Independent newspaper showed 55 per cent of respondents want the country to get out, and 45 per cent want to stay in. A survey by YouGov showed that 43 per cent of respondents are in the "leave" camp, against 42 per cent for "remain".
These numbers sent all key regional markets into the red yesterday, with Singapore's benchmark Straits Times Index (STI) paring 1.33 per cent to 2,785.43.
Shanghai shares fell 3.21 per cent, Hong Kong's Hang Seng shed 2.52 per cent, and the Nikkei in Japan dropped 3.51 per cent.
The days leading up to the June 23 referendum may be similarly choppy, warned KGI Fraser Securities trading strategist Nicholas Teo. "These poll results are data points that traders love to trade on... The uncertainty that worries the markets is that, should Brexit happen, what will the Scottish or the French nationalists want? Could it be the start of EU's break-up?"
He added: "With other risk events, including the Federal Reserve and Bank of Japan policy meetings, also at play this week, people will want to take some money off the table."
European Central Bank president Mario Draghi's call last week for regional governments to help boost growth also raised further concerns of economic stagnation.
CIMB Private Banking economist Song Seng Wun said Britain "is a big economy, so Brexit is a big unknown, and markets hate the unknown". "As the gap between 'leave' and 'remain' camps shrinks with each poll, we see money being taken out and put into safer assets like gold in the past few weeks."
Gold prices have put on close to 6 per cent since the start of the month while the British pound has dropped some 2 per cent against the US dollar in the same period.
The local market and companies will not be invulnerable, but the impact will be limited, DBS market strategist Yeo Kee Yan noted. He said: "If Brexit does happen, companies with earnings exposure to Britain - such as ComfortDelGro, Ascott Residence Trust and City Developments - will be affected.
"But I think the STI will still hold at around 2,700, or hitting 2,630 at worst. This is because the local stocks are trading at low levels that we think would have already priced in these risk events."
However, Mr Song said of the pre-voting polls: "Oftentimes these polls are not consistent with the voting results. Brexit is a very emotional matter, and it's easy for the public to say 'leave' when they are being polled. But at the voting booth, I think - I hope - that's when the economic considerations come in."