THAI and other Southeast Asian stocks were hit hard by yesterday’s British vote to exit from the European Union, triggering a panic sell-off in most assets except gold, but regional authorities believe the impacts will be temporary.

The Bank of Thailand expects limited direct impacts on trade and investment, but notes that there will be significant indirect risks from the historic divorce due to increased global market volatility in the short term and uncertainties over the possible exits of other EU members.

Supachai Panitchpakdi, former director-general of the World Trade Organisation, said the United Kingdom would be fine outside the EU as it would be able to maintain its status as a key financial centre for Europe because of Frankfurt’s limited capacity and the relatively weaker positions of non-UK financial institutions.

“Britain has been an EU member that has not used the single currency, but it has prospered well. The EU is now like a group of patches of people, not a true federation,” he said.

He expects the Brexit vote will encourage other EU members to consider leaving, particularly Greece and the Baltic states. He also expects greater ease for Asean in striking a free-trade agreement with the UK. Making deals with the EU is complex, given the bloc’s reluctance to reduce its huge agricultural subsidies, he said.

Surin Pitsuwan, the former secretary-general of Asean, said negative impacts were inevitable over the next two years as Britain negotiated to leave the EU, but Asean member states should not panic as the regional grouping was not like the EU.

The Brexit vote rocked commodity markets as well yesterday, as oil and copper prices slumped, but gold hit a more-than-two-year high.

“The effect of this exit is pretty much still a question mark,” said Alex Tiu of AB Capital Securities in Manila, adding that investors would be on a wait-and-watch mode.

The Stock Exchange of Thailand shed 23 points or 1.62 per cent to close at 1,413, while Singapore stocks were down 2.1 per cent; those in the Philippines were down by nearly 2 per cent; Vietnam was down nearly 2 per cent; and Jakarta nearly 1 per cent.

On trade and financial sectors, BOT said there would be limited impacts as Thai exports to the UK were only 1.8 per cent of the total while Thai banks’ direct exposure in the UK and Europe-wide financial sector was only 1.31 per cent of total assets.

The central bank noted that the baht’s depreciation was in line with regional movements, but cautioned that the capital market would be more volatile in the short term, with possible capital outflows from equity and bond markets.

However, in the long run a change in strategies by private companies and other EU trade partners could cause uncertainties in trade and investment, which could stall global economic recovery.

Anusorn Tammajai, dean of Rangsit University’s faculty of economics, said the UK’s status as a financial centre would be weakened as some financial institutions might move to other EU countries.

He said the pound could fall by as much as 20-30 per cent, while the euro should weaken by 15-20 per cent.

“Economic nationalism” would gain momentum, leading to more protectionism and slower growth in global trade and investment.

Isara Vongkusolkit, chairman of the Board of Trade of Thailand, said there could be increased flexibility for the UK to negotiate a free-trade deal with other countries.

Vallop Vitanakorn, vice chairman of the Federation of Thai Industries, said that if other European Union members such as Spain left, there would be more concern over EU integrity.

Businesses, especially importers, should now hedge currency risks with regard to the pound sterling and the euro, he said, noting that Thai exporters would need to look for other potential markets as the EU and UK economies slow.

Commerce Minister Apiradi Tantraporn said the UK was Thailand’s third-largest trading partner among the EU countries. Exports to the market averaged US$3.87 billion (Bt136.7 billion) during the past three years for a trade surplus of $992 million.