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HONG KONG—Shares and currencies in Asia are headed for a potentially turbulent week, as the U.K.'s vote to leave the European Union threatens more aftershocks in global financial markets.

Fund managers and traders are bracing for further strength in the yen, while more losses are expected for stocks such as HSBC Holdings PLC and other British companies listed in the region. Japan's Nikkei Stock Average, which suffered most in Asia after Friday's 'Brexit' referendum, could remain in the firing line.

The U.K.'s unexpected 'leave' vote reverberated first in Asian trading hours, sending the Nikkei down almost 8% and the Japanese yen soaring to its highest level since November 2013. Economic officials in Japan held a special meeting over the weekend to discuss the state of the markets.

The yen often rises in times of market turmoil, as investors regard it as a haven. However, that is bad for the profits of Japan's many prominent exporting companies. The Nikkei is down 21% year-to-date.

"Markets could get even more oversold," says Sean Taylor, chief investment officer for Asia Pacific at Deutsche Asset Management in Hong Kong, adding that investors might not start bargain hunting for a few more weeks.

The direct economic impact on Asia from Britain's decision to leave the EU trading bloc is expected to be limited, given only a small proportion of the region's exports go to the U.K. Still, Asian markets can't avoid the aversion to risk now gripping investors around the world.

There is no sign yet things will get as bad as during the global financial crisis in 2008, when markets almost seized up as high-profile banks such as Lehman Brothers failed. But the hammering given to bank stocks in London and New York on Friday shows nerves are frayed.

There is already speculation about other EU members considering their own votes on whether to quit, adding to the uncertainty surrounding that region's economy.

Many leading central bankers, including the U.S. Federal Reserve Chairwoman Janet Yellen, European Central Bank President Mario Draghi and Bank of England Governor Mark Carney are all slated to speak this week.

Beyond possible further pain in Japan, Goldman Sachs estimates a further 5%-10% drop in the MSCI AC Asia Pacific ex-Japan benchmark of shares, noting it closed down about 3.5% Friday.

Fund managers don't rule out buying opportunities emerging in Asia in coming months. Many think Japanese authorities will do more to try to shore up the country's economy, in particular by intervening in currency markets to weaken the yen if it rises further against the dollar.

"We think Bank of Japan draws the line in the sand at 100 [yen to the dollar]," says Khiem Do, multiasset fund manager at Baring Asset Management in Hong Kong. The currency traded as strong as ¥ 99 to one U.S. dollar Friday. "That's why we don't want to be too aggressive in selling of Japan [stocks] from here," he said.

China has been more insulated from 'Brexit' worries, with overseas investors still restricted from putting money into and out of the country easily. The main Shanghai Composite benchmark fell just 1.3% Friday.

Investors could begin to see that market as a bit of an oasis, say analysts.

"[There's] that trader gut feeling that [the second half of the year] may well be China's time to shine given the EU uncertainty," says Gavin Parry, who runs Parry International Trading Ltd., a boutique brokerage in Hong Kong. "Can't help thinking it's time to fill your boots."

But China's yuan is a different story. 'Brexit' has pressured global currencies, sending the yuan to its weakest level in more than five years.

At Pimco's Singapore office, Asia portfolio manager Luke Spajic said he is keeping "a very close eye on how the [onshore yuan level] is being fixed."

The People's Bank of China, which manages the currency's daily exchange level, pledged Friday to keep the yuan "basically stable." Hours later, PBOC Governor Zhou Xiaochuan said the bank had been monitoring the U.K. referendum and was in communication with the International Monetary Fund, global central banks and other authorities.

Investors say the best-case scenario for China and most Asian markets is that the Federal Reserve further delays hiking interest rates this year.

"Under current conditions, the markets will lower the likelihood of monetary tightening, especially with the Fed," said Pimco's Mr. Spajic. Higher U.S. interest rates could spell trouble for firms in emerging markets, including in Asia, that are struggling to pay back U.S. dollar loans.

Takashi Nakamichi and Pei Li contributed to this article.

Write to Chao Deng at Chao.Deng@wsj.com

(END) Dow Jones Newswires

June 26, 2016 20:45 ET (00:45 GMT)

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