I have remained on the sidelines during the Brexit debate. Despite being a Brit by birth, I haven't lived in the country since 1990, and left when I was 19. Whenever I go back to Britain, I feel like a foreigner.
That impression was only reinforced on a recent trip to visit my folks, who still live in my home town, Bristol. I arrived early in the morning at Terminal 3, and was due to hit some meetings in London before catching the Bristol bus. So I figured I would take the underground into the capital. But I couldn't see the signs directing me to the the subway system.
"How do I get to the Tube?" I asked at the information desk. The Argentinian fielding my query told me to turn around and go back the way I had come. "Follow the signs to the Underground. The Tube is the same as the Underground," she told me by way of explanation, as if I was fresh off the boat. Or in this case, Cathay Pacific. An immigrant treating me as a foreigner. Ouch.
I vote in Hong Kong, where we have pretend elections for a useless government. But I don't vote in the United Kingdom anymore. With Brexit, I wish I had.
Brexit hasn't had much effect in Asia, so I haven't written about it ¿ until now. But we couldn't ignore Brexit on Friday.
Asian markets got crushed in Friday trade, with the Nikkei closing down 7.9% in Tokyo, Australia off 3.2% and Korea down 3.0%. The Hang Seng was down 3.9% in Hong Kong in afternoon trade, with Singapore down 2.0% at the same time. Chinese stocks -- so hard for foreign investors to access -- barely budged, Shanghai down 1.3% on the day.
Tokyo's exporters took a beating. Toyota Motor (TM) crashed 8.7%. Bridgestone (BRDCY) shares shed 8.5%. Panasonic (PCRFY) plunged 8.3%. Japanese companies also have operations in Britain, of course, and the U.K. production lines of Nissan Motor (NSANY) caused it to fall 8.1% in Tokyo. Hitachi (HTHIY), which makes trains in the United Kingdom, dropped a whopping 10.3%.
The Nikkei's drop was its worst in five years, dating back to the Fukushima Daiichi nuclear explosion. Back then, the fear was that nuclear fallout could drift as far south as Tokyo, and expat families fled. The ramifications of the Brexit bombshell aren't exactly life-threatening but for sure are going to rumble on.
We were obviously too blithe out here in Asia. Now plenty of people with British ties or passports in Britain's former colonies in Asia -- Hong Kong, India, Malaysia, Singapore -- are working out what Brexit means to them.
Asians have long had a love affair with London, and have dominated the market for new-build apartments in the British capital. Recently, they have been buying real estate in other English cities, too. My good friend and former soccer teammate Derek Ma has been selling off his Hong Kong property holdings since 2014. He has funneled some of the proceeds into real estate in Manchester, Tokyo and Bangkok. He took to Facebook right away to lament how his U.K. holdings are now worth considerably less than yesterday.
"I really couldn't believe this is happening," he said. "I just hope they'll be doing so much better in the long-term by leaving the dead wood behind. It'll just be accelerating the breaking up of the E.U."
It's a terrible decision to leave the European Union. Goods will get more expensive because of higher tariffs. Lines will be longer at immigration. Yes, fewer foreigners will be able to make their way into Britain. But in my experience -- and I've been an immigrant in the United States for 11 years and in Hong Kong for 15 -- immigrants work harder than locals in many jobs the locals don't want to do. They have an overwhelmingly positive impact. Far from living off social security, they want to get ahead, and finance their families.
When I was growing up in the 1980s, you could forget getting a British builder or a plumber to come on time. They would make appointments and just not show up. Contractors were notorious for starting a job and then disappearing half-way through while they secured other work. Now, my friends tell me their Polish plumbers show up on time, and get the job done.
The majority of Brits clearly don't see it that way, and would rather suffer economically than see Mr. and Mrs. Al-Hamsi from Syria move in next door. Société Générale forecasts that Britain will give up 1.6 percentage points of growth by 2018 as a result of Brexit, and another 1 percentage point lower by 2020. The eurozone will be 0.3% worse off, the French bank predicts.
It was the parochialism of Britain that in part encouraged me to leave. While I was studying at the University of North Carolina, I would fly back for the Christmas holidays. Again I would often head in to London, this time to meet friends. When making plans, I would find it hard to get my long-lost mates to cross the city. "It's too far, and taxis are too expensive," they would say. But wait a second, I would think, I just flew almost 4,000 miles to get here!
The Brexit decision will affect earnings in export-oriented economies such as Japan, Korea and China dramatically over the long term. The open, service-driven industries in Hong Kong and Singapore will be buffeted, and I would bet British banks cut back on overseas operations as Britain walls itself in.
Brexit will be at least a two-year process, so exporter earnings will see a gradual lag. But the impact on currencies has been dramatic and immediate.
The yen strengthened 3.4% against the U.S. dollar on Friday, breaching ¥100 to the greenback at one point although it recovered from ¥99 to ¥103. The stronger yen presents a serious headache for all its huge exporters. Against the British pound, the Japanese currency gained a whopping 18.3% at one point, as sterling sank to its lowest levels since 1985.
The Singapore dollar and the Korean won both fell 2.4% to the U.S. dollar on Friday, companies in Southeast Asia's finance hub and export-driven Korea sure to suffer.
On the positive side, my Hong Kong dollars -- pegged to the U.S. dollar -- are now worth a lot more pounds. If I wanted to move back to Britain (and I don't) it would be time to hop on Cathay Pacific and that Tube once again to shop for apartments. I'll have to tell that property-purchasing friend of mine that it's time to double down.