South Korea’s financial authorities are increasing their monitoring of the financial market in light of the vote opening on Thursday on whether Britain should leave the European Union.

Global analysts have been cautioning that an exit vote would be devastating for the global economy, including Korea where British capital invested in local stocks accounts for over 8 percent of the total as of May this year.

“The market is expected to face increasing uncertainties ahead of the Brexit referendum, a rate increase in the U.S. and financial instability in China,” said Finance Minister Yoo Il-ho in a meeting with officials, adding that the country needs to maintain high vigilance.

If “Brexit” is realized, it would not only severely affect growth of the world’s fifth largest economy, but also that of Asia’s fourth largest economy, whose biggest free trading partners include the EU. The Organization for Economic Cooperation and Development warned that the European Union without the U.K. could see its growth fall by 0.35 percentage points by 2018.

If there are British capital outflows on the exit vote, Korea’s stocks and currency will face increasing volatility, which will inevitably force the Bank of Korea and the Finance Ministry to intervene in the foreign exchange market by dumping dollars to ease pressure off the depreciating won.

Besides global equities and currencies tumbling on weakened confidence and risk appetites following the vote for an EU exit, this political sentiment will negatively affect other EU economies to seek departure from the Union.

“From a macro perspective, it is increasingly difficult to argue that a heavily indebted global economy – especially one that is experimenting with negative interest rates – can be immune from the potential effects of a Brexit,” said Steven Landis, a portfolio manager of Macquarie Funds Management.

“The direct ramifications of a Brexit are probably going to be delayed and rather muted, largely because of the two-year grace period that Britain would have to unwind its administrative connections to the EU.”

The British public is currently split over Brexit. Britain has been seeking to regain control over its borders amid a high number of Europeans entering the country without visas for residency and work. It has also been expressing discontent over high EU membership fees with a lack of benefits in return.

The voter outcome is expected to be unveiled on Friday at around 3p.m. in Seoul.

By Park Hyong-ki (hkp@heraldcorp.com)