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Brexit could be positive for ASEAN if Fed delays rate hike

Indonesia's Infrastructure and property-related counters such as Bumi Serpong Damai are favored among analysts as Southeast Asian equity market stabilizes after Brexit shock.

SINGAPORE -- Brexit may indirectly have a positive impact on Southeast Asian equity and currency markets, as market volatility and uncertainty surrounding the U.K.'s decision to leave the European Union will likely push the next U.S. Fed rate hike back, according to analysts in the region.

Expectations that the Fed will delay its rate hike are shared among a number of analysts in Southeast Asia, who believe the delay could help minimize capital outflows from Asian markets. "Under the leadership of Chair [Janet] Yellen, the Fed seems particularly attentive to downside risks," said Sim Moh Siong, senior currency strategist at Bank of Singapore, in a recent report. "The market could further push back Fed rate hike expectations to December or beyond, which is U.S. dollar negative" against Asian currencies, he added.

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