3.

In your opinion, in which ways will Brexit affect British pound exchange rate,
FTSE 100, gold price, property price, businesses and economy of England within
these three years? Explain in details.

As we know that United Kingdom is one of the European Union that joined in

year 1973. But in this which is 2016, United Kingdom plans to leave the European

Union with supported by Theresa May since she becomes prime minister after David

Cameron stepped down. Several impacts will happen if the United Kingdom leave the

European Union.

The first aspects that will be affected if United Kingdom leave European

Union is British pound exchange rate. In my opinion, within these three years, the

value of pound exchange rate will fall down once the United Kingdom leave the

European Union. This is because already 43 years United Kingdom applying EMS

which is European Monetary System, they are using the Euro as base currency.

Besides that, United Kingdom also category as hard peg in their exchange rate which

is give up their own sovereignty over monetary policy and adopted other country

currencies when United Kingdom joined European Union.

If United Kingdom decides to leave the European Union, the British pound

exchange rate will plummet because United Kingdom will apply monetary

independence. United Kingdom will set their domestic monetary policy and interest

rate policies by themselves. Applying this type of ideal currency by United Kingdom

can help to limiting the inflation rate, combating recessions and fostering prosperity

and full employment in United Kingdom. But it can become a risk for United

Kingdom because they to start from the beginning.

 Falling in British pound exchange rate will also give an opportunity to

foreigners come to United Kingdom for traveling or have an education in United

Kingdom. Besides that, the other countries will also increase their import from United

Kingdom in falling British pound exchange rate period.

FTSE 100 is the one of the aspect that will be influenced once Brexit happen.

FTSE is an index composed of 100 largest companies listed on the London Stock

Exchange (LSE) and also referred as blue chip companies. In my opinion, within

these three years, the FTSE 100 of blue chip United Kingdom listed shares will lower

than before. This is because the British pound exchange rate is falling, so most of the

investor will revoke their fund from the stock market. When the investor revoke their

fund from stock market, they will use that fund to do the other investment such as

invest in gold or silver.

Gold price also the one of the aspect that will affect by Brexit. In my opinion,

the gold price will keep increasing if the United Kingdom leaves the European Union.

This is because most of people want to seek safe haven assets, so the people who are

investor will pull their money from the stock market and bank. They are willing to get

out of cash and into real money such as gold if the Euro currency falling. Besides that,

the gold is a liquidity commodity good which is more easily converted into cash. So

the people who invest in gold will feel safety.

For the property price in United Kingdom, in my opinion, the price of property

will still remain within these three years. This is because demand for the property is

remain higher since the British pound exchange rate falling. Falling in British pound

exchange rate will give the opportunity for the international buyers capital flow in.

Besides that, the shortage of homes and consistent demand will help to recover the
property market confidences. Moreover, the International buyers are given a positive

opportunity to invest in United Kingdom property due to falling in British pound

exchange rate. Furthermore, the seller are given a plenty of time to understand the

option ahead them due to uncertainty date for United Kingdom leaving the European

Union.

Next aspect that will be affected by Brexit is business and economy in

England. In my opinion, if United Kingdom decides leave European Union, this

situation will give negative impact to business and economy in England. The business

and economy in England will go through marked economics slowdown which is

facing recession. Besides that the job market in United Kingdom will face suffered a

dramatic free-fall. This situation will give a negative impact to business and economy.

In additional, the United Kingdom trades freely with European Union

countries before. If United Kingdom leaves European Union, United Kingdom need

to face an additional cost which is tariff for export good. But this additional cost will

not obstruct United Kingdom trade with other countries. The possibility of tariff on

goods exports to the European Union will give greater downside potentials, this

situation will give the opportunity to open up trade with other countries or to increase

the sectors competitiveness through the greater competition or cheaper input gives it

more upside potential.

 4. In your opinion, in which ways will Brexit affect the ringgit exchange rate,

KLCI, palm oil price, businesses and economy of Malaysia within these three

years? Explain in details.

n this year, United Kingdom which is 43 years has been joined in European

Union has defied expectations from opinion polls and bookmarks and voted to leaves

the European Union(EU). If United Kingdom is really leave European Union, it will

give a several impact to Malaysia such as ringgit Malaysia exchange rate, KLCI, palm

oil, business and economy in Malaysia .

First aspects that will influenced is the ringgit Malaysia. In my opinion, the

pound exchange rate in United Kingdom will depreciate when United Kingdom leave

the European Union, so this situation might be lead our country appreciated within

three years. This situation will also cause our country Purchasing Power Parity

become high so that Malaysia can increase their import from United Kingdom during

their currency depreciate period. Not only Malaysia will import from United

Kingdom, the other country also will do like that. This situation will also give the

opportunity to become arbitragers. Because they will try to profit from stimulate

exchange rate differences in different market.

If our currency appreciate against United Kingdom currency, Malaysians who

are willing to study in the United Kingdom are given the opportunity to study at there,

hence a weaker of pound sterling (GBP) in United Kingdom would help the

affordability of their education cost. On the other hand, for most Malaysians, a

holiday to the United Kingdom would be more affordable due to falling value in

United Kingdom currency.

 Second aspect that will be affected by Brexit is Kuala Lumpur Composite

Index which is derived from 100 companies that have been chosen from a cross

section of total listed company in Malaysia. In my opinion, if United Kingdom leave

the European Union, this situation will cause our Bursa Malaysia KLCI will in

unhealthy condition. The European share will falling if the United Kingdom really

decided want to leave the European Union. So if the Malaysia invests in European

share, more of less would be affected.

Palm oil will also be affected if the United Kingdom leave European Union. In

my opinion, within these three years , our palm oil price will reduce. This is because

the palm oil demand and price are based on currency exchange as well as weaker

economics growth. Negative repercussions will occurs if Brexit vote to spread beyond

the United Kingdom and Europe to the global economy. On the other hand, in US

dollar terms, price for palm will will become negative with slower global economy

growth. The consequences is the price for palm oil will fall and the price for substitute

goods for palm oil will increase like soybean oil.

Besides that, due to our country will less their export palm oil to United

Kingdom, so it will causes higher palm oil inventory and negative for the price. In the

opposite, if the United Kingdom currency which is pound against the ringgit rate has

increased, it will lead to positive on palm oil price. Besides that, the higher exchange

rate can improve the palm oil competitiveness so it can boost up the palm oil

demand.and in long run the palm oil can regained its competitiveness level at global

market share.
 Business and economy of Malaysia more or less will influenced by Brexit. In

my opinion,Malaysia might be face minimal impact if United Kingdom leaves

European Union. This is because this is not a prominent our investment trade with

United Kingdom instead will bearing on Malaysias trade with other countries. In my

opinion, diversify capital and strong economy will help us for challenges ahead. One

the other hand, trade between United Kingdom and Malaysia are not been large

because Malaysia have less reliance on United Kingdom and European Union exports

destinations .

In additional, the foreign direct investment In Malaysia from UK for the

manufacturing sector has not been extensive instead of Malaysias direct investment

in United Kingdom is higher and has been rising steadily. As a part of investment, if

Malaysia has invest property in United Kingdom, Malaysia need to face the risk of

property prices falling due to depreciation in value of pound sterling. Furthermore, if

the United Kingdom vote to leave European Union success, it will causes fall in

confidence in the global economy, this situation will affect crude oil prices and

appetite for risk assets such as Malaysian equities and bond. Consequences of

economics in Brexit can be category as indirectly because of aversion to risk asset or

reduction in confidence, and the depreciation in value of pound sterling might affect

the Malaysians investors in the United Kingdom.