KUALA LUMPUR (June 24): The Malaysian market staged a mild recovery after sliding to a low of 1,611.80 in morning trading. As at 3.17 p.m., the FBM KLCI index was down 19.27 points or 1.18% to 1,620.71.

Jameel Ahmad, vice-president of market research at FXTM, said financial markets and spectators across the globe are in a complete state of shock, following the unexpected outcome to the European Union (EU) referendum that the UK has voted to leave the EU.

“Investors were guilty of ignoring the consistent opinion polls that repeatedly pointed out that the vote was going to be close and as a result, the possibility of a UK exit had been severely under-priced throughout the financial markets.

“Make no mistake, around this time last year, the markets were in complete pandemonium over what implications a “Grexit” could have on the global markets and the ramifications of a “Brexit” will carry far more severe risks,” Jameel in a market analysis today.

A local fund manager said the market is entirely unprepared to deal with Brexit, as most were anticipating the Britain to vote to remain.

“The Brexit will trigger a risk-off environment. While Malaysia’s fundamental will not be significantly affected by it, we will see the spill over effects to the rest of the local market. More foreign outflow is expected. Yen, gold and U.S. dollar will be stronger during this time.

“You will see a weakened ringgit and the fall in the equity market just like everywhere else. Most likely, the bond market will also be impacted,” he said.

Across Asia, almost all of the indices were in the red, with Japan's Nikkei 225 declining the most of a 7.9% drop. China’s Shanghai composite slipped by 1.35%, while Hong Kong’s Hang Seng fell by 4.4%.