Asia: Markets extend gains but Britain EU vote shreds nerves

[HONG KONG] Asian markets edged up on Tuesday but dealers remained cautious as the optimism over Britain's EU membership that drove a global rally faded, with the knife-edge referendum just days away.

With a series of polls putting the "Leave" and "Remain" camps neck and neck ahead of Thursday's poll, two of the world's investment titans, Li Ka-shing and George Soros, warned an exit vote would spell economic doom for Britain.

While stock traders built on the past two sessions' gains, the pound slipped back slightly after enjoying its best single-day gain since the dark days of the global financial crisis in 2008.

"The markets have a myopic focus on one thing: the UK referendum vote," Chris Weston, chief market strategist at IG in Melbourne, told Bloomberg News.

"All the euphoria of yesterday has seemingly abated and we hit the refresh button. We almost need to take this week one day at a time, such is the nervousness around trading."

Dealers are also awaiting testimony on the US economy by Federal Reserve boss Janet Yellen from Tuesday.

In early trade, Hong Kong added 0.6 per cent, Shanghai gained 0.8 per cent and Tokyo was up 0.5 per cent by the break.

Sydney put on 0.4 per cent and Singapore 0.2 per cent while there were also healthy advances in Taipei, Manila and Jakarta.

The pound edged down to US$1.4663 from US$1.4675. At one point it jumped 2.4 per cent Monday to a three-week high of US$1.4708.

Mr Li and Mr Soros were the latest in a succession of business and political leaders to have thrown their weight behind the campaign for Britain to stay in the economic bloc.

Writing in the Guardian, Mr Soros - who made a billion pounds out of Britain's collapse from the Exchange Rate Mechanism in 1992 that became know as Black Wednesday - warned of a Black Friday if the country leaves.

"Sterling is almost certain to fall steeply and quickly if leave wins the referendum," Mr Soros wrote.

"I would expect this devaluation to be bigger and also more disruptive than the 15 per cent devaluation that occurred in September 1992."

He warned Britain would be in a worse position this time as the Bank of England already has interest rates at 0.5 per cent, while they were at 10 per cent in 1992.

Separately, Mr Li - one of Asia's richest men who has huge investments in Britain from power to telecoms - said an exit would hurt the entire continent.

"If Brexit happens, it will be detrimental to the UK and it will have a negative impact to the whole of Europe," he said in his first interview with international media since 2012.

"Of course I hope that the UK doesn't leave the EU."

AFP