What Brexit Would Mean For Asia

What Brexit Would Mean For Asia
Photo Credit: AP/達志影像

What you need to know

The Brexit vote this week looms over Europe, but how will it affect Asia? A quick tour d'horizon.

The U.K. will hold a referendum on whether to leave or stay in the EU on June 23. Over the past several months, heated debate on the pros and cons of a British exit from the EU, dubbed Brexit, has taken place in the U.K. and Europe. But how does it look for Asian countries?

'Greater China'

Chinese investors have a huge stake in the U.K. A Chinese state visit to the U.K. last year brought more than £30 billion in investments to Britain, the Telegraph reported. As much of the investment was made anticipating access to the Eurozone market, a Brexit would be disappointing to those investors. The BBC suggests a Brexit may even damage Xi Jinping’s (習近平) image domestically and call his judgement into question, as Xi has spent much effort courting a relationship with the U.K. and as a result could be seen to have “bet on the wrong horse.”

Hong Kong has marginal trade ties to the U..K, so the expected downturn would not be substantial if the U.K. were to leave the EU. However, the expected drop in the British stock markets would lead to a cash flow out of the Hong Kong financial hub, affecting the Hong Kong economy, Apple Daily reports. Wenweipo forecasts a huge impact in the Hong Kong stock market due to the extensive financial ties with U.K. shares, with many Hong Kongese firms holding stakes in British businesses and properties.

Observers in Taiwan are not expecting a major impact from Brexit. The United Daily News reports the U.K. is Taiwan’s third-largest trading partner in Europe, but only accounts for 1.13% of Taiwan’s total trade.


The Financial Review observes that Indonesia and Malaysia are the most vulnerable to a cash outflow triggered by Brexit, as they are dependent on external financing. The Siam Commercial Bank predicts Brexit will cause the baht to slightly weaken in response to the expected depreciation of the pound, The Nation reports.

Economic impacts aside, Brexit could affect the ASEAN regional grouping as a whole. The Bangkok Post’s editorial team argues that a successful Brexit would lead to a loss of confidence in ASEAN, as it was designed to resemble the EU. To prevent such a loss of confidence, the Post said Asian leaders should better communicate the benefits and necessity of ASEAN at a grassroots level. Tan Sri Dr Munir Majid, a visiting LSE Ideas fellow, argues in The Star that the issues brought up by eurosceptics also plague ASEAN. He calls for free dialogue among ASEAN politicians to address the dissatisfaction, otherwise ASEAN will suffer from instability.


Similar to China, Japanese firms have invested in Britain to export to the European market. Although no Japanese companies have announced plans to move out of Britain in the case of Brexit, many prefer the U.K. remain in the EU framework, Japan Today reports. Major Japanese firms like Nissan, Hitachi, and Toyota have manufacturing sites in Britain, and Brexit will make operating in Britain less profitable for them.

Gendai Business predicts a Brexit will have profound consequences for Japan due to the financial connections Japan has with Wall Street, which is in turn highly responsive to British markets.


India has substantial economic links to Britain, so a Brexit would have major impact on the country's economy.

A report by the British Department of Trade and Industry shows that India is the third-largest source of foreign investment to Britain. The Federation of Indian Chambers of Commerce and Industry have warned against voting for a Brexit, claiming a Britain exit would harm Indian investments in the U.K., the Guardian has reported.

An economic downturn in the U.K., likely in case of a Brexit, could also have an adverse impact on the flow of Indian professionals to the U.K., The Times of India says. Although the Brexit camp originally argued a Brexit would provide greater freedom of entry to Indian nationals, this argument was later rebutted by the Minister of State of the British Foreign and Commonwealth Office, The Indian Express says.