Minggu, 26 Juni 2016

Article#560 - Brexit

[latest update: 22nd September, 2016, 20:45 (UT+9)]

A little glance on this blog every now and then will be more than enough to show that I am not really into macroeconomics and financial issues. Mainly because I lacked the adequate understanding on the topic, but that will only account for the lack of coverage on those topics only here in this blog. The fact that I rarely talk about this particular issue at all, is simply due to me being not familiar with the political turmoil that wreak havoc within the United Kingdom and European Union as a whole.

Then–who would've thought about this–it drew my full attention. For a completely unexpected reason.


Result of UK referendum of EU membership, depicted by region (left),
local constituency (center), and weighted results of local constituency (right).
Shades of blue indicate areas in favour of leaving the EU, while shades of yellow
indicate areas in favour of remain in the EU.
"Brexit will be followed by Grexit. Departugal. Italeave. Fruckoff. Czechout. Oustria. Finish. Slovakout. Latervia. Byegium."
- Imtiaz Mahmood
What would then be known by the moniker "Brexit", at the time, is still unheard of all across my social media timeline. That day, the afternoon of 24th of June in Japanese Time, would be only the fourth day before my planned trip to leave Japan for several days, the details of which will be given in the upcoming posts. It is barely half a week before the scheduled departure time, yet at that particular afternoon, I still had no possession of the necessary currency for the travel, which is the mighty Euro. This particular perk of mine will come as no surprise to people close enough to know me—I even blatantly portray myself as "Procrastinator" in my Facebook profile page; go figure.

But hey, four days are no long times when it comes to this sort of thing. And apparently the gears of the universe had enough of it already, I was then forced–purely by my amateurish economical insight, that is–to wrap things up real quick.
Just during the afternoon, the news of United Kingdom's referendum to leave the European Union started to surface on my social media timeline. It was early morning within the borders of the United Kingdom, and the circulating news had already pointed out how the ballot leans UK toward leaving the EU. As the sun rose onto the slightly damp corpse of the British Empire, as fate would have it, the result was obvious: UK residents has voted in favor of leaving the EU.

That, among all, lead me to leap onto the Brexit bandwagon.

The impact of that result takes no time to unfold.
From all the news outlets shared all over my social media timeline, it became evident how the world, responded to the morning news of UK actually voting to leave EU. It was particularly apparent from the freefall of both Great Britain poundsterling and European euro, which value dropped by 11% and about 6%, respectively.
At ths point, it's probably obvious: this Brexit has secured me several thousand yens to buy euro.

Graph depiction of EUR-JPY exchange rate in the preceding 10 hours (above)
and 30 days (below) to 24th June, 2016, 15:40 (UT+9).
Screenshot from bloomberg.com.
So now is the time for some money-hunting, I guess?
Because only an hour later, I found myself waiting on the chairs of Japan Post (JP) bank to buy some euro. As far as I an tell, there was nobody else seemingly excited about the prospect of plummeting euro value (or also poundsterling in that matter).
That, despite the bank being fast enough to update the currency value so that I need not to worry about missing out the downfall.

With that rate, it may appear that I can buy Euro now and sell it later after my trip
without losing that much money.
Euro-Yen rate is the lowest one, depicted by EUR.
Being one of the most renowned Japanese bank, of course they provide news coverage. And needless to say, it's Brexit again on the TV.

News about... basically announcement of Brexit.
Final results: 17,41 million people voted for Leave, while 16,14 million voted for Remain.
Quick recap about Brexit
Referendum results (without spoiled ballots)
17,410,742 (51.9%)
16,141,241 (48.1%)
Aside from the general result portrayed in the above photo, there's an interesting note about the poll result. While United Kingdom in general favored leaving the European Union, things didn't roll the same way for two of its constituent countries: Scotland and Northern Ireland. Both countries basically voted to remain in the EU, with Scotland especially favour staying with 62% versus 38%; even all districts of Scotland voted to remain in the EU. As for Northern Ireland, while some of its districts favour leaving the EU, overall it leans toward staying by 55.8% versus 44.2%. Unfortunately for them, voters from these two countries only accounts for 10.34% of total votes; basically the result is largely dictated by English voters.
Even when Greater London, which also voted in favour of remain in the EU, is counted alongside those two countries, the number still falls short to the other regions which favour leaving the EU.

This, normally, had caused tensions to arise within the UK itself: Scotland already called for a referendum to leave the UK and rejoin the EU, while Ireland had started persuading Northern Ireland to join them under the umbrella of "united Ireland". Right-wing leaders of several EU countries, like France's Marine le Pen and Netherlands' Geert Wilders had also called for a referendum of their own countries to follow the Britons, mainly citing reasons related to immigration problems as a driving force.

All in all, leaving EU is a complicated and lengthy process, as Article 50 of the Treaty of European Union gladly explains. It will take at least another 2 years for the UK to pave its way out of the EU, and until an agreement is reached in relation to this leaving process, we will still have to wait and see. The least I can tell is that with UK leaving the EU, world market may never be the same again. UK is one of the world's economic powerhouse, after all; it's a member of G7, that may be more than enough to explain how big of an impact this whole process may inflict upon the world market.

I'll stop my blabber here though, before I speak too much about thing I may not have enough knowledge about. I'll let these articles handle the rest of the ongoing discussion.


As an aftertouch, let me close this post with several pieces of videos.

[UPDATE] Several insights of Brexit aftermath can also be found in these videos.

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