UK election 2017: The impact on Asian business


UK election 2017: The impact on Asian business

Published Date: 2017-06-12 | Source: BBC | Author: Leisha Chi

UK election 2017: The impact on Asian business

Uncertainty hangs over the UK after Prime Minister Theresa May's decision to call a snap general election backfired, resulting in a hung parliament.

The pound has dropped by more than 2% against the dollar, sterling's biggest one-day fall since the Brexit referendum vote last June.

So far there has not been much in the way of global contagion in the currency or stock markets.

But in Asia, where shares were trading as results drifted in, some companies heavily exposed to the UK saw their share prices fall.

Power and property

Asian firms with big investments in Britain were under pressure over concerns political uncertainty will complicate Brexit negotiations.

They include infrastructure firm CKI, Power Assets and CK Hutchison, which are all owned by Chinese billionaire Li Ka-Shing. Shares in those businesses are down nearly 2%.

Malaysian property conglomerate YTL, Singapore-based transport firm Comfortdelgro and property firm City Developments also have investments in Britain.

"Without question, there is volatility ahead. The market is desperate for any indication of what a Brexit deal might look like," Lee Hardman, an analyst at MUFG said.

Financial firms

For financial firms in the UK, one looming question about Brexit is whether they would have to move their operations if they lost access to the single market - an issue over so-called European passporting rights.

Shares in British lenders Standard Chartered Bank and HSBC slipped by about 1% on Asian markets as the prospect of a hung parliament became clearer.

Fund manager Janus Henderson, which is also heavily exposed to the UK market for revenues, fell by about 1.5% in Sydney trading.

The Australia-listed CYBG, which owns the Clydesdale and Yorkshire banks, fell as much as 1.4% before recovering. The firm, which was spun from National Australia Bank last year, gets all of its revenues from the UK.

Stock markets

Overall Asian stock markets have largely shrugged off the election upset - as well as digesting possible implications from former FBI director James Comey's testimony to a US Senate committee.

Japan's benchmark Nikkei 225 stock index closed 0.5% higher and South Korea's Kospi cended the day up 0.8