If there has been anything dominating the headlines and your Facebook news feed in the past two weeks, it’s probably Brexit. Everyone pretty much has something to say about Britain leaving the EU. From the decrease in trade to the increase in racist attacks, it seems to be all doom and gloom for the not very United Kingdom.
As you’re reading the headlines, you’re probably wondering what does Brexit really mean for Singapore? Well, the only thing that’s certain is uncertainty, for the Brexit will take at least two years to finalize and the world will have to wait while Britain sorts out her messy divorce papers. In the meantime, here’s how the Brexit could affect life and business at home.
For the Property Investor
Singaporeans owning investment properties in the UK probably aren’t the happiest people now that the value of their investments has fallen with the pound. The negative outlook on the future of the UK economy certainly doesn’t help either. For Singaporeans who do want to buy a home in the UK for whatever reason, the depreciating pound may be good news, especially for big-ticket purchases like property, where every cent on the exchange rate counts.
However, caution is the keyword. In fact, UOB [Link 1] has even suspended London real estate loans after the referendum, and banks are advising customers to take into account foreign exchange risks given market uncertainty.
For the Stocks Investor
On the more liquid side of things, Singaporean investors may also be concerned about owning stocks that have significant interests in the UK. The extent of the impact really depends on the business structures of each company; so don’t go into panic mode just yet.
One blue chip stock that may see an impact is Comfortdelgro Corporation Ltd, in which the UK market accounts for about a quarter of the company’s earnings. City Developments Limited, another blue chip stock, is a real estate developer and investor where the UK market accounts for about 12% of its sales. How these firms perform would depend on how they manage to maneuver the UK market in the coming years.
For the Consumer
The average consumerist Singaporean would probably feel like they won another reason to shop. The pound, which has been hovering around 2 SGD to 1GBP, has fallen to about 1.85 SGD to 1GBP. That’s one legitimate reason to spend more time and money on ASOS buying things that you don’t need.
For Singaporeans traveling or studying abroad, the weaker pound [Link 2] just made life a lot easier, though the post-Brexit racism attacks [Link 3] would you make you wonder if it’s even worth it at all.
Analysts seem to have a consensus that the Brexit wouldn’t really have a significant or direct impact on Singapore’s businesses. Britain sits on number 22 on the list of Singapore’s trading partners, so any impact may be marginal in the big picture. Besides, it really is too early to make any conclusive judgments, as it would take around two years or even more for the UK to draft new trade agreements and negotiate on tariffs and regulations. However, in the immediate to mid-term, Singaporean exporters may see a slower demand due to the stronger Singapore dollar.
While some think that the uncertainty and fear may subside soon enough, others think that the Brexit is just the beginning of more divisions and cracks within the EU. What do you think?
Links for the above article:
Link 1: http://www.cnbc.com/2016/06/30/brexit-impact-on-property-singapores-uob-suspends-london-real-estate-loans-after-brexit.html
Link 2: http://www.straitstimes.com/singapore/singaporeans-flock-to-money-changers-after-pound-dives-on-brexit-news
Link 3: http://www.huffingtonpost.co.uk/entry/racism-after-brexit-attacks-muslims-leave_uk_57766dc8e4b0f7b55795302d