Trading Asian Markets Post Brexit

Trading Asian Markets Post Brexit

china-flagWhen checking the news lately, words such as ripple effect, devaluing of currency, contingency plan and more gyrations are what traders may see. Something as big as Brexit causes changes around the world and that is where the ripple effect comes into play.

Trading Asian Markets Post Brexit
Trading Asian Markets Post Brexit Getty Images

By Monday, June 27, reports of the Big Three Credit Rating Agencies: Standard & Poor’s (S&P), Moody’s and Fitch Group, had all downgraded the credit rating of the United Kingdom. Chinese Premier Li said Monday, “a disillusioned British butterfly has flapped its wings and the entire global financial system could collapse.”

Since the Brexit vote caused a plunge in offshore Yuan, the People’s Bank of China devalued Yuan fix by 0.9 percent. Li went on to say an increase in instability in a particular country or region could trigger the “butterfly effect.” This could, in turn, affect the global economic recovery and financial market stability. He also stated, “All economies are highly dependent on each other and no country can manage alone. See complete article at  Zero Hedge.

United Kingdom citizens may not have realized the implications their votes would have on the global community. By China devaluing their currency, a ripple effect could cause challenges for India, whose foreign currency debt now stands at $0.5 trillion (25 percent of GDP). Some brokerages worry that further devaluation would mean the SENSEX (S&P BSE SENSEX) may hit 22,000.

Furthermore, reports Tuesday and Wednesday claim intervention by Chinese authorities to support offshore yuan in morning trading. After falling 1.2 percent since Brexit, “the People’s Bank of China does not want to see the offshore yuan depreciating too fast,” said Kenix Lai, a Hong Kong-based foreign-exchange analyst at Bank of East Asia Ltd. See  news Bloomberg article.

Amid all of these reports, traders have a capped risk avenue to trade the Asian markets. The North American Derivative Exchange, Nadex, offers Stock Index Futures based on China A50 and Nikkei.

Marketed by Nadex as China 50, it is based on SGX FTSE Xinhua China A50 Index Futures. These are 50 firms on the SSE and Shenzhen exchanges. Nadex’s version of the Nikkei is Japan 225. It is based on SGX Nikkei 225 Index Futures. It tracks the activities and sentiment of the Japanese stock market.

When trading with Nadex, your risk is capped and known before a trade is entered. You will never receive a margin call. Both Binary options and spread trades are available for these instruments and Nadex offers low fees. The CFTC- Commodity Futures Trading Commission regulates Nadex, which is a US government agency overseeing futures, options and swaps trading. The CFTC’s mission is to protect market users and the public from fraud, manipulation, abuse and systemic risk.

The information contained above may have been prepared by independent third parties contracted by Nadex. In addition to the disclaimer below, the material on this page is for informational and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Nadex or elsewhere. Please note, exchange fees may not be included in all examples provided. View the current Nadex fee schedule. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representations or warranties are given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk and any trading decisions that you make are solely your responsibility. Trading on Nadex involves financial risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results. Nadex contracts are based on underlying asset classes including forex, stock index futures, commodity futures, cryptocurrencies, and economic events.

Trading can be volatile and investors risk losing their investment on any given transaction. However, the design of Nadex contracts ensures investors cannot lose more than the cost to enter the transaction. Nadex is subject to U.S. regulatory oversight by the CFTC.