The Boao Forum for Asia has co-organized a Financial Cooperation Conference with the Hong Kong Monetary Authority in Hong Kong. Participants in today’s conference held in-depth discussions on how to deal with the economic challenges after Brexit. They also shared views on how to mitigate the risk brought to Hong Kong. 

The conference was held amid the global economic uncertainty brought by Britain’s exit from the EU. How the Asia-Pacific countries and regions could integrate to face the challenges ahead was one of the major topics. Participants agree that finance can play a key role in stimulating growth in the real economy.

“This Hong Kong conference is focusing on financial cooperation, particularly how to kick start growth in the real economy through innovative means of financial cooperation,” said Zhou Wenzhong, Secretary-General of Boao Forum for Asia.  

“When the world struggles for growth, one way out is perhaps the infrastructure. That connectivity servers both short term and long term sustainable development. The key is financing.”

Analysts say Asian economies are vulnerable to collateral damage from the Brexit. Japanese brokerage firm Nomura has lowered its aggregate 2016 GDP growth forecast for Asia, except Japan, from 5.9 percent to 5.6 percent. 

And the financial hub of Hong Kong could suffer severely. Hong Kong’s exports of goods to the EU in 2015 accounted for 14 percent of its GDP, the highest in Asia. Nomura warned the Brexit will push Hong Kong’s economy to shrink by 0.2 percent this year.

Hong Kong’s economy has been struggling for a months-long downturn, due to weak exports, retail sales, and the housing market. It is a reflection of the economic slowdown in the Chinese mainland. Now Brexit may make the scenario more gloomy.

The Brexit will keep the U.S. dollar strong, and consequently the HK dollar, which is pegged to it. Experts say this will continue having a negative impact on Hong Kong’s tourism and retail sales, especially if it means a weaker RMB. 

Challenges indeed go with opportunities. After Britain’s exit from the EU, London could lose its competitiveness as an offshore yuan center, with a sizable chunk of the existing RMB deals moving to Hong Kong. The depreciating pound may slow the pace of US interest-rate hikes and deliver good news for Hong Kong’s stock and property market.

There would be a two-year transitional period once the Brexit starts. Hong Kong can try to mitigate the risk and seek new opportunities.