1. Newsroom
  2. The Brexit Lessons For ASEAN (Asia’s EU)
Menu
Analysen 15.07.2016

The Brexit Lessons For ASEAN (Asia’s EU)

The Brexit Lessons For ASEAN (Asia’s EU)

Since its incorporation in 1967, the Association of Southeast Asian Nation (ASEAN) has implemented a mandate that not only aims to accelerate economic and social progress alongside member countries, but simultaneously promote peace and security. Coupled with a similar population size and tenet that overlaps the European Union (EU), ASEAN was naturally subjected to comparisons with its western counterpart.


The Brexit decision in late June was unexpected, and markets now worry that other EU members may use the political momentum to seek their own referendum.  For ASEAN, we do not believe that the bloc is at risk nor will it face a similar EU crisis. However, the lessons of Brexit are too important to ignore.

Compared to the EU, ASEAN is plagued with political inefficiencies, which ironically, protects the fate of the bloc nations. The ASEAN Secretariat lacks true authority over member countries, while ASEAN foreign ministers often fail to reach communication statements that reflect the common viewpoints. Referred to as the ASEAN way, members avoid interfering into neighboring affairs, preferring generally paltry statements. Less hapless, ASEAN countries maintain individual fiat currencies and independent central banks. Avoiding the creation of an ASEAN currency, the bloc escaped political instability that European Central Bank (ECB) now experiences.

Politically contentious, the euro is economically efficient, as it effectively further integrated trade and augmented trade partners within the bloc. ASEAN intra-regional trade is about a quarter compared to the EU, reflecting the huge growth potential.

Though unlikely to see an ASEAN member exit from the bloc, the Brexit vote echoes concerns globally. Specially, the Brexit voice of frustration that integration and economic prosperity are not shared equally underscores the important lesson for ASEAN in hopes to avoid destabilization.  Wealth disparity, evident not just across the bloc but among individual members as well, is pernicious and leads to populism. Labor immobility also hinders growth potential and produces frustration.


ChristopherChu.jpg

Christopher Chu
Assistant Fund Manager - Asia

 

Convertible Bonds

Convertible bonds add convexity to your portfolio

Find out why convexity works in the short-to-long term

Watch the video

Meistgelesene News

Analysen 19.02.2020

Changes in consumption patterns

Despite being fast-moving and quite unpredictable, changes in consumption patterns are expected to reshape the economic landscape.

Analysen 15.04.2020

The Case For Frontier Debt

India’s total infected cases (979) and fatality rate (25) remain low but it has been escalating. According to the World Health Organisation (WHO), this can become overwhelming, if uncontrolled.

Analysen 22.04.2020

Impact Report 2019: an eventful year

UBP is proud to release the second edition of its Impact Report.

Auch lesenswert

Analysen 20.05.2020

Why choose impact in emerging markets?

UBP’s expert Mathieu Nègre explains why impact investing in listed emerging equities is a significant investing opportunity for at least two reasons.

Analysen 18.05.2020

COVID-19: Die UBP hält Sie auf dem Laufenden

Auf dieser Webseite finden Sie Informationen zu unserem Business Continuity Plan und unsere aktuellsten Einschätzungen zur Marktlage im Zusammenhang mit der Coronavirus-Pandemie (COVID-19).

Analysen 18.05.2020

Clouds gathering on the horizon

Spotlight - We see three key risks on the horizon: secondary outbreaks in the US, rising US-China geopolitical tension and political fragmentation in the Euro area