โดย Mark Yagalla
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บทความโดย Mark Yagalla
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How Brexit Can Affect Thai Stocks
Right now, one of the biggest uncertainties facing global investors is Brexit. For those that are unfamiliar with Brexit, Brexit is the withdrawal of the United Kingdom (UK) from the European Union (EU), which is scheduled to take place on 29 March 2019 at 11 pm UK time. It follows the referendum of 23 June 2016 when 51.9 percent of voters chose to leave the EU.
The EU is similar to ASEAN except that EU laws govern all 28 countries that are members. The EU aims to ensure the free movement of people, goods, services and capital within the internal market, enact legislation in justice and home affairs and maintain common policies on trade, agriculture, fisheries and regional development. The EU covers 7.3% of the world’s population and accounts for 24.6% of global GDP. Basically, the EU is ASEAN on a much larger scale.
The problem with Brexit is that UK politicians cannot agree on how best to leave the EU. The goal of Prime Minister Theresa May is to leave the EU with a deal in terms of trade and movement of people. If there is no deal, how do goods cross the English channel and how do UK and European citizens travel between continental Europe and the UK? Right now, there are no passport controls, but that all changes with Brexit.
Prime Minister May secured last minute changes to her Brexit package from the EU and sought to pass her deal in Parliament. Unfortunately, last night the deal failed. Parliament will now vote to exit the EU with no deal or to extend the deadline to withdraw from the UK.
This is a big deal that global markets are unprepared for. More likely, it is looking like there will be no deal struck. This runs the risk of the British Pound falling to 2016 levels when UK voters chose to leave the EU. The Pound traded as low as 1.20 to the US Dollar. The Pound is currently at 1.31 to the US Dollar.
A no Brexit deal will also trigger a global selloff in stock markets around the world. Thailand will not be immune to the effects. The UK is still a trading partner for Thailand and there are an estimated 1 million UK citizens living in Thailand. They will be greatly affected as the value of the Pound drops against the Baht and will buy less goods and services in Thailand. Furthermore, if goods cannot get into the UK or goods shipped from the UK, it will create a surplus of goods sitting on docks and in warehouses, which will cause global trade to pause. As Thailand is an export-driven economy, this is not good for Thai stocks that rely on exports.
The bottom line is the Brexit is a global issue that could create a global crisis. Too many are not paying attention to what could happen. While I am not suggesting panic at this time, it is important to monitor the latest Brexit news as it could have an enormous impact on global commerce, global stocks, and which will impact the SET.
I will be updating stock2morrow readers as the situation develops. The key always is to have a plan and trade that plan accordingly. Remember, preservation of capital is job number one.
