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

 

Asset class

Japanese equities

Why the current outlook makes a compelling case for Japanese equities

Watch the videos

Le news più lette

Analisi 13.12.2018

Prospettive d’investimento UBP per il 2019

Opportunità e sfide in un mondo non più sincronizzato

Analisi 16.04.2019

A Fresh Look at Japanese Equities

Making the case for Japanese equities

Analisi 09.01.2019

Emerging Market Fixed Income – 2019 Outlook

After a market sell-off in 2018, we believe that emerging market (EM) fixed income should perform better in 2019, thanks to sound fundamentals, reduced political risk and more favourable technicals and valuations.


Altro da leggere

Analisi 13.05.2019

Trump unconstrained

Spotlight - The Sunday night tweets from the US President not only introduced uncertainty into the ongoing US-China trade negotiations and prospects for future global growth, but should also serve as a reminder to investors of the new, more challenging risk environment facing them looking ahead.

Analisi 06.05.2019

Initial thoughts on Trump’s new tariff threats

President Donald Trump has raised pressure on China to strike a trade deal by threatening a possible increase of tariff to 25% (from 10%) on $200bn worth of Chinese exports to US by Friday (May 10). He may also consider extending a new 25% duty on another $325bn worth of Chinese products.

Analisi 16.04.2019

A Fresh Look at Japanese Equities

Making the case for Japanese equities