Beruflich Dokumente
Kultur Dokumente
Natanicha Sangprakai
Mr.Abel Cadias
English 10 / 10:03
The Brexit, a situation in which England leaves European Union (EU), would decrease
Thailands stock market. The purpose of this research report is to argue that the Brexit affects
Thailand's stock market. The importance of this research report is to raise awareness from the
effect of Brexit to Thailands stock market. The pieces of information found in this research
report are based on eight sources. First, Alex Hunt & Brian Wheeler write an article entitled
Brexit: All you need to know about the UK leaving the EU describes general information
about Brexit. Next, an article by Achara Deboonme, entitled Brexit will have limited impact
on Thailand shows the impact of Brexit in Thailand. Third, an article entitled How will
Brexit impact Thailand? from DBS Bank explains the impact from Brexit. Fourth, an article
entitled Bank of Thailand warns of greater Brexit risks talks about risk of bank in Thailand.
Fifth, an article entitled Brexit and its implications in Thailand discusses the implication
from Brexit. Sixth, an article entitled In the Wake of Brexit: What to Expect Across Thailand
and ASEAN Economies provides information about the expectation. Moreover, an article by
Gemma Purnell How will Brexit affect retirees living in Thailand? narrates about the effect
of Brexit to retirees people. Lastly, an article by David Harper Forces That Move Stock
SANGPRAKAI 2
What is Brexit?
Brexit comes from the words Britain and exit. A referendum in which everyone of
voting age can take part to decide whether the UK should leave or stay in the European
Union. After the vote, UK decided to leave EU. It made a lot of changes in England. The first
change is the UKs prime minister, Theresa May. Alex Hunt & Brian Wheeler (2017),
reported that Prime Minister David Cameron does not want to leave the EU after having an
agreement with other EU leaders that would change the terms of Britain's membership.
However, it is not easy for UK to leave the EU now because of the Article 50 which is a plan
for the country that wants to exit. It was signed up by all EU states which became law in
2009. It has to take two years to agree with Article 50. Theresa May, the UK new president
run this process on 29 March 2017 which means the UK is expected to leave on Friday, 29
March 2019 but it can be extended if all 28 EU agree. Prime Minister Theresa May in 2016
said that Leaving the EU would be better than signing up to a bad one. However, the UK is
still under World Trade Organisation rules, which means the customs checks and tariffs.
Some people argue that the UKs trading partners would not want to start a trade war while
others said that the UK will get a higher cost for selling and buying goods abroad. Another
change is the fall of pounds value. This means that imported goods will be more expensive
which is good for other countries. Also, the CPI inflation rate rising to 2.3%, its highest level
for three and a half years. This is a sign of more cost pressures set to feed through in the
months to come.
SANGPRAKAI 3
Sathapholdeja (2016), there will be a greater financial change in the currency and bond
markets, which could impact the cost of funding, but not an economic shock. The UK is
Thailands third-largest export in the EU countries. The average export to the market is $3.87
billion per year, while the shipment value average is five times higher. In short-term, the
fluctuation in the currency will happen until the market can adapt themselves, said Kobsak
Pootrakool (2016). But in long-term, it might challenge the global economy, which includes
the risk that other members in EU may consider to exit. The risk of economic in Thailand is
the unsustainable recovery cycle in Thai business sector. Since the poll was revealed, the SET
Index dropped to 1,393.83 (-2.9%) intraday, then rebounding to close at 1,413.19 (-1.6%).
The British pound fell harshly by 8% to 48.3 Thai baht on that day from 52.7 baht in the day
earlier and the euro also fell, but a less percent which changes from 40.1 baht to 39.1 baht,
DBS Bank (2016). After the separation, both British and EU will have to take a time to
reform and restructure their economy system which will not affect Thailands economy and
tourism but some of the tourists from EU and British might pause their planned for overseas
trips for a short period. The instability in European economy may cause investors move to
Thailand to invest in Thailands stock market. Stanley Kang (2016) noted that Most of EU
and UK companies that invest in Thailand are multinational companies which do so during
periods of uncertainty at home. This could be an opportunity for Thailand to attract investors
if it can maintain political stability. This may cause the investors move Thailand but it also
SANGPRAKAI 4
perverse effect. The Brexit will heighten uncertainty in global economic and spark a big
change in the financial market and capital flows. However, Thailand is strong enough to stand
in the capital flow volatility. Thailand will face with a limited amount of short-term external
debt. Europe has 17% of Asias total export market, this will cause challenges for Asias
export markets. Not only the market, but also the tourism. Thailand is one of the top
destinations for European tourists. According to Narit (2016), Thai businesses should be
aware of this before borrowing or investing, even in stock, bonds, or etc. The key risks are
the political uncertainties and they are now underpriced. Also, the Thai business sector was in
the unsustainable recovery cycle before. The Brexit is not going to affect the stock market
directly.
It will happen because of the companies in the UK. After UK left the EU, every
company in England has to pay tax for export goods and cannot accept employees from other
countries in the EU. So, most of the companies even the UKs owner company, HSBC,
decided to change its main companys location to either Ireland or Netherland because of the
tax that England has to pay. On the other hand, Thailand has a limit impact because the
trading rate of Thailand and England is only 8% of Thailands exporting rate. The only things
that need to be concerned are the investor because of the instability in the stock market. Isara
Vongkusolkit (2016) noted that the challenges for trading and the fluctuating exchange rate
are that Britain will make free-trade agreement easier. In particular, if Thailand would like to
SANGPRAKAI 5
negotiate FTA with Britain. Instead of protecting Thailands economy, the situation is likely
to benefit more than effect because Asia has the lowest impact among the other continents.
The only point that needs to beware is the tourism because Thailand might lose tourist from
Europe and England for a short period, so Thailand should focus on tourism from other
countries.
Conclusion
The purpose of this research report was to argue that the Brexit affects Thailand's stock
market. This research report concluded that the Brexit positively affected Thailands stock
market in both short-term and long-term because Thailand and UK did not trade with each
other a lot. The problems which will be affected is the tourist from the UK might decrease
and UK companies in Thailand might be unstable in the stock. After the Brexit, the UKs
currency fell down a lot which is an opportunity to invest in Forex. Also, Thailand will make
the free-trade agreement with the UK easier. Thailands stock market might be increased
because due to the insecure condition of the UKs stock market, the investor might change to
invest in Thailands market. This research report recommends that how Brexit is an
SANGPRAKAI 6
References
Achara Deboonme (June 20, 2016). Brexit will have limited impact on Thailand. Retrieved
March 24, 2017 from http://www.nationmultimedia.com/news/business/EconomyAnd
Tourism/30288566
Admin (August 15, 2016). In the Wake of Brexit: What to Expect Across Thailand and
ASEAN Economies. Retrieved March 28, 2017 from http://silklegal.com/in-the
-wake-of-brexit/
Alex Hunt & Brian Wheeler (March 30, 2017) Brexit: All you need to know about the UK
leaving the EU. Retrieved March 28, 2017 from http://www.bbc.com/news/uk-politics
-32810887
Business Desk (June 24, 2016). Bank of Thailand warns of greater Brexit risks. Retrieved
March 24, 2017 from http://asianews.network/content/bank-thailand-warns-greater
-brexit-risks-20720
David Harper (2016). Forces That Move Stock Prices Retrieved March 28, 2017 from
http://www.investopedia.com/articles/basics/04/100804.asp
DBS Bank (June 27, 2016). How will Brexit impact Thailand? Retrieved March 24, 2017
From https://www.dbs.com/aics/templatedata/article/generic/data/en/GR/062016/
160627_insights_how_will_brexit_impact_thailand.xml
Gemma Purnell (June 29, 2016). How will Brexit affect retirees living in Thailand? Retrieved
March 28, 2017 from http://retirethailand.info/how-will-brexit-affect-expat-retirees
-living-in-thailand/
Prnews (June 27, 2016). Brexit and its implications in Thailand. Retrieved March 24, 2017
from http://www.bangkokpost.com/forum/viewtopic.php?f=69&t=101143