The United Kingdom's vote to exit the European Union (EU) or Brexit has no immediate direct ratings impact on
Asia-Pacific (APAC) sovereigns or banks, says Fitch Ratings.

In a statement today, Fitch Ratings said the spike in political uncertainty in the UK – and resulting effects on investor risk appetite – could pose the greatest challenges for Asia in the short term.

If protracted uncertainty has a sustained effect on investor and consumer confidence, the resulting tightened liquidity conditions and pressure on emerging markets capital markets could weigh on growth in the region, it said.

"This is especially the case for more trade-integrated economies such as Singapore, Taiwan, Hong Kong and Korea. But it remains far from clear that such a sustained market reaction will develop," it said.

Fitch said some of the negative "risk off" market moves that occurred in the immediate aftermath of the Brexit vote had already been partly unwound this week.

Furthermore, it noted that Asian market reaction had been far more muted than in Europe.

The potential for developed market central banks to act, namely the Federal Reserve slowing the pace of its rate increases, could also play a key role in calming markets, it said.

Fitch noted that the direct impact from UK trade on Asian economies was also likely to be limited.

The UK is the world's fifth-largest economy, and Fitch expects a slowdown in short-term Gross Domestic Product (GDP) growth as a result of the referendum.

But exports to the UK equate to less than 1.0 percent of GDP and account for less than 3.5 percent of total exports for every Asian country, it said.

Over the long term, Fitch said it was also possible that a UK outside the EU might be able to make quicker progress on trade liberalisation with Asian countries than as a member of the EU.

Currently, only South Korea has a free trade agreement with the EU among Fitch-rated APAC countries (some smaller Pacific island economies also have agreements), it said.

The direct financial linkages are limited as well, and so the risks are more indirect with respect to Asia's banking systems.

But emerging Asia accounts for less than 15 percent of the total external claims of UK banks, citing Bank for International Settlements data.

Singapore and Hong Kong, as offshore financial centres, were more significantly exposed relative to the size of their economies, but these were mainly local/regional claims from UK subsidiaries and unlikely to see significant withdrawal as a result of Brexit, it said.

Indirect trade effects should the Brexit vote lead to wider political instability and a broader slowdown in Europe could be more significant for Asia, with the EU as a whole accounting for a much larger share of Asian exports than the UK alone.

But the effects should take time to materialise, and Fitch believed that it is the smaller economies in Europe that are most at risk from Brexit - as opposed to the larger economies such as Germany and France which account for the bulk of Asian exports.

Fitch noted that China was likely to remain a much more significant driver of economic outcomes in APAC than Brexit, while risks from tightening US monetary policy also remained a key challenge.