SYDNEY (BLOOMBERG) - Asian stocks pared losses and Tokyo shares trimmed steep declines on Tuesday morning (June 28) speculation policy makers will move to shore up financial markets after Britain's vote to exit from the European Union.
The MSCI Asia Pacific Index slid 0.4 per cent to 125.23 as of 11 am in Tokyo, after dropping 1.2 per cent earlier. Japan's Topix index fluctuated between gains and losses after paring a decline of as much as 2.2 per cent amid speculation the Bank of Japan may boost stimulus measures. South Korea's Kospi index rose 0.2 per cent, reversing a drop of 1 per cent.
Singapore's Straits Times Index also reversed and earlier drop to trade up 0.25 per cent at 2,736.69 as of 10:46 am.
Investors are watching closely for signs that central banks will help to ease the market turmoil. Toshihiro Nikai, Chairman of Japan's ruling party general council, proposed a 20 trillion yen (S$266 billion) stimulus package to Prime Minister Shinzo Abe, the Nikkei newspaper reported.
"We are probably going to have looser policy settings than before the vote," Tim Schroeders, a Melbourne-based portfolio manager at Pengana Capital, who helps oversee about US$1.2 billion in assets, said by phone. "You'd have to suspect that the bias is to the downside for global growth and as a result that stimulus remains in light of increased uncertainty.
Investors are grappling with the potential of slower global growth after Britain's decision to exit the EU without a clearly defined path and timeline. More than US$2.5 trillion has been wiped from the value of global shares since the day of the vote last Thursday.