The British pound yesterday slumped to a new 31-year low, dipping below US$1.28 at one point in Asian trading, as investors shunned the currency in the fallout of the country’s vote to leave the EU.
The pound fell to as low as US$1.2798, its lowest since June 1985, before recovering to about US$1.299 in London trade as Britain’s blue-chip FTSE 100 stock index opened higher.
That still left the pound 13 percent below its levels before the June 23 referendum, and about 0.2 percent down on the day.
Against the euro, sterling hit a three-year trough, trading as weakly as ￡0.8629 per euro before climbing back to about ￡0.8551, which was still down 0.6 percent on the day.
Worries about financial stress in the aftermath of the vote for Brexit have grown in the past two days as three of Britain’s biggest property funds suspended trading following increases in the number of investor redemptions since the referendum.
The latest of these was M&G Investments Ltd, the fund management arm of insurer Prudential PLC, which said it was suspending trading in its US$5.7 billion UK property portfolio and feeder fund after the London market close on Tuesday.
“Clearly Asia came in and didn’t like what it saw in the news flow, with the suspension of trading in these property funds,” UBS Wealth Management currency strategist Geoffrey Yu said, adding that many international investors have large exposures to the UK property market.
The Bank of England (BoE) on Tuesday expressed concern about a fall in investor demand for British assets — which could make it harder for the country to finance its large current-account deficit — as well as trouble in commercial real estate making it harder for businesses to use their property as collateral to obtain loans.
Next week the bank is to make a decision on interest rates, which are already at record lows.
Investors are pricing in a 25 basis point rate cut next month, but many say that could come next week.
A poll of more than 60 foreign-exchange strategists on Tuesday forecast that the pound would be at US$1.27 by year end from Monday’s close of US$1.3 on Tuesday.
“The next catalyst for a sterling sell-off could come from the Bank of England next week,” BNP Paribas SA strategists wrote in a research note.
“The market is still likely under-pricing BoE easing, with our economists forecasting a 25 basis point rate cut next week followed by a 25 basis point cut at the August meeting and ￡100 billion worth of quantitative easing, including corporate bonds, to be announced by the November meeting,” they wrote.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
NEW MARKET: The partnership opens up India to the Dutch company, which already has a strong hold in the semiconductor market of South Korea, Taiwan and China ASML Holding NV entered into a partnership agreement with Tata Electronics Pvt Ltd aimed at ramping up India’s goal to develop domestic chip-manufacturing capabilities. The Dutch company’s technology would help power Tata Electronics’ planned 300 millimeter (mm) semiconductor foundry in Gujarat, according to a joint statement from the two companies on Saturday. The signing of a memorandum of understanding coincides with a visit by Indian Prime Minister Narendra Modi to the Netherlands, which is looking to deepen bilateral relations with New Delhi. ASML, whose top customers include Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co, makes lithography machines that can print
PORTFOLIO REBALANCING: The adjustments in three global equity indices reflect rising investor appetite for semiconductor and artificial intelligence-related stocks Taiwan’s weighting in major global equity indices compiled by MSCI Inc is to rise modestly following the latest quarterly review, underscoring the market’s expanding role in emerging-market portfolios, as global investors continue to favor the nation’s technology sector. Taiwan’s weighting in the MSCI Emerging Markets Index is to increase by 0.30 percentage points to 23.76 percent, after the changes take effect at the close of the May 29 session. Its weighting in the MSCI All-Country Asia ex-Japan Index is to rise 0.37 percentage points to 27.16 percent, while that in the MSCI All Country World Index is to edge up slightly to
The Hsinchu County Government’s Labor Affairs Department yesterday said that it has received a plan from cosmetics brand Taiwan Shiseido Co (台灣資生堂) detailing mass layoffs at its plant in Hukou Township (湖口). While the labor authorities did not disclose the number of employees to be laid off, Japanese news media earlier in the day reported that the closure of the company’s factory in Hukou would result in 170 employees losing their jobs. Shiseido followed the law by reporting its layoff plan, the department said, adding that authorities would closely monitor negotiations between the management and affected employees and step in if any
RSS