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BRICS isn’t de-dollarizing anytime soon – Asia Times

On: October 28, 2024

BRICS Summit host Russian President Vladimir Putin disappointed both anti-colonial enthusiasts and Western alarmists last week by conceding that the bloc’s members “have not built and are not” building a payment system to challenge the US dollar-based global banking system.

The leaders of the two economic giants present at the summit, China’s Xi Jinping and India’s Narendra Modi, did not mention alternative payment arrangements in their respective remarks.

The technical requirements for alternative payment systems aren’t the problem. The SWIFT system that controls interbank payments in dollars and other major Western currencies merely transmits secure messages.

The challenge, rather, is economic: US demand for imports fuels an outsized portion of economic growth in the Global South. China’s exports to the US amount to just 2.3% of its GDP, but about half of its surge in exports to the Global South since 2020 depends on re-exports to the United States.

While China’s exports to the Global South more than doubled from about US$60 billion a month to $140 billion a month, US imports from the Global South rose from about $60 billion a month to $100 billion a month during the past four years.

Dependence on the US market varies widely across the universe of developing countries. Vietnam and Mexico, the two favorite venues for so-called “friend-shoring,” that is, transferring production away from China to putatively friendlier countries, registered big increases in exports to the US as a share of GDP.

Vietnam’s exports to the US in 2023 amounted to about 27% of the country’s GDP, compared to just 10% in 2020, while Mexico’s US exports rose to 27% of GDP in 2023 from 20% in 2010.

Singapore and Malaysia, by contrast, showed little increase in US exports as a share of GDP. Indonesia and Brazil export comparatively little to the United States.

Some Asian countries, notably Malaysia and Thailand, export more than 60% of their GDP, mainly to other Asian countries. Brazil, Indonesia and China are far less export-dependent.

Today, China exports just 19% of its GDP compared to 27% in 2010, which means that an increasing share of GDP growth depends on domestic consumption and investment.

What makes the United States such an important factor in the economies of the Global South is its enormous current account deficit. The table below ranks the current account surpluses and deficits of the 20 largest economies from the largest deficit to the largest surplus.

With a current account deficit of $80 billion a month, or $1 trillion a year, the US appetite for an excess of imports over exports dwarfs the rest of the world.

China is the largest or second-largest economy in the world, depending on whether we count GDP in US dollars or adjust for purchasing power parity, but China’s imports from the Global South have been stagnant for three years.

China won’t replace much of American import demand for the time being, given Beijing’s focus on high-tech investment rather than consumer demand. At the margin, that leaves the Global South all the more dependent on the US.

Projecting current trends into the future suggests a steady rise in consumer spending in the Global South, especially in East Asia, and the emergence of robust domestic markets and less dependence on exports.

Below is a chart published by the Brookings Institution think tank last year, projecting that the total consumer market in East Asia will overtake the US consumer market by 2028.

Developing countries, though, don’t pay their bills on projections. Arranging payments for goods in international trade is a trivial issue. More challenging is financing long-term deficits.

India, for example, used to run an annual trade deficit with Russia of less than $3 billion. Discounted Russian oil sales to India after the start of the Ukraine war boosted this to more than $60 billion.

What will Russia do with the Indian rupee equivalent of $60 billion? It would far prefer to have another currency, for example, the UAE dirham, that can be used to buy goods in third markets.

The Global South doesn’t yet have the capital markets or the currency stability to convince a surplus trading country to simply hold assets of the deficit country in exchange for goods.

That is what the United States does so well: Its $18 trillion negative net foreign asset position corresponds to the last 30 years’ cumulative current account deficits.

America sells assets to foreigners in return for their goods. The Global South doesn’t have the assets to sell, or at least not in the form that the rest of the world would like to own.

That helps explain why the BRICS Summit’s final declaration relegated the issue of payment systems to feasibility studies:

We reiterate our commitment to enhancing financial cooperation within BRICS. We recognize the widespread benefits of faster, low-cost, more efficient, transparent, safe and inclusive cross-border payment instruments built upon the principle of minimizing trade barriers and non-discriminatory access.

We welcome the use of local currencies in financial transactions between BRICS countries and their trading partners. We encourage strengthening of correspondent banking networks within BRICS and enabling settlements in local currencies in line with BRICS Cross-Border Payments Initiative (BCBPI), which is voluntary and nonbinding, and look forward to further discussions in this area, including in the BRICS Payment Task Force.

BRICS central banks don’t hold each other’s currencies as reserve assets, with limited exceptions. Just 2.3% of world central bank reserves are held in China’s RMB, up from 1.1% in 2016 but down from a peak of 2.8% in 2022. Most of them are buying gold. If the legend on US currency states, “In God We Trust,” gold says, “Trust nobody.”

Sweeping changes across the Global South would be required to make their currencies attractive reserve instruments—transparency and risk management of capital markets, the development of a local middle class, infrastructure, and education.

A great deal of this is happening in stages in many developing countries but progress is gradual and uneven. We now can foresee circumstances under which the Global South might declare independence from the dollar system. But we aren’t there yet and won’t be for years under any foreseeable circumstances.

Follow David P Goldman on X at @davidpgoldman

Japan’s LDP rocked and roiled in an election earthquake – Asia Times

By: Bolen C

On: October 28, 2024

In: Asia

As political miscalculations go, it’s hard to top Shigeru Ishiba’s decision to hold a snap election Sunday, just 30 days after his own shock rise to Japan’s premiership.

Ishiba’s Liberal Democratic Party (LDP) lost its majority for only the third time since 1955. But this latest indignity for a party that long took for granted the priorities of Japan’s 125 million people could be the most impactful yet.

Ishiba’s blunder, and the political upheaval it’s causing, come amid a bewildering array of headwinds zooming the nation’s way.

They include slowing growth at home, China’s downshift, North Korea’s provocations and the increasing odds Americans will return Donald Trump and his trade wars to the White House.

It comes as Japanese inflation outpaces wages at a moment when the Bank of Japan mulls whether to continue hiking interest rates. It comes as investors assess whether the Nikkei 225 Stock Average’s surge to record highs is sustainable as policy instability reigns in Tokyo.

At the very least, Ishiba seems more destined than ever for short-timer status as Japanese leader following Sunday’s disastrous election showing for his LDP.

“Japan now enters a period of political uncertainty about whether a new coalition government can be formed,” says David Boling, analyst at Eurasia Group. Economist Takeshi Yamaguchi at Morgan Stanley MUFG adds that “political uncertainty will remain high in the near term.”

Granted, one silver lining for the LDP is that opposition parties didn’t join forces to win a majority or cobble together a governing coalition. Yet the best-case scenario for the LDP and its coalition partner Komeito is to find additional seats via a third party.

Still the damage has been done, particularly to Ishiba and his ability to retain the premiership or claim he has a mandate to lead.

Though predecessor Fumio Kishida stuck around for three years and mentor Shinzo Abe lasted nearly eight, most Japanese prime ministers get 12 months to make their mark – and most don’t.

Chalk it up to leaders spending so much time keeping their jobs there’s no time to do their jobs. The cycle, especially prevalent since the mid-1990s, seems certain to come for Ishiba. Even before Sunday’s repudiation from voters, Ishiba had suffered one of the most precipitous drops in public approval political observers had ever seen.

In late September, when Ishiba shocked the political establishment by navigating past the two front runners for the premiership, Ishiba enjoyed support rates north of 50%. But after four weeks of policy U-turns and managerial chaos, his numbers fell into the 20s.

That’s far from what Kishida had expected when he stepped aside last month. With his own approval in the low 20s amid scandals and soft economic conditions, Kishida opted to let his party head into Sunday’s contest with a fresh face.

It surprised many that this meant swapping one 67-year-old conservative with another. Ishiba’s man-of-the-people persona led LDP bigwigs to hope he might revive the party’s image.

Instead, reality caught up with Ishiba – and fast. For years, Boling notes, Ishiba polled very favorably with the public.

He benefited from being seen as an outsider within the LDP because he was willing to criticize the party. That made him unpopular with many LDP lawmakers but popular with the public.

But “since becoming prime minister, he has made some missteps that have opened him to attack,” Boling notes. That Sunday’s results mean Ishiba is “weakened” and that the “odds would be against him rebounding.”

If Ishiba does stay in, he’ll be busy struggling to save his premiership. Odds are he’ll be too preoccupied to address the economic headwinds racing Japan’s way.

Chief among them is an economy fast losing altitude. This might come as quite a surprise to LDP elders who encouraged Kishida to stand down.

Back in mid-September, when these machinations were in motion, the party figured the economy was on sound footing.

At the time, the Nikkei index was testing all-time highs amid stable economic growth, 10 years of corporate governance reforms were gaining traction and hopes were high that wages gains would accelerate.

Earlier this year, labor unions scored the biggest wage bump in 33 years. That fueled optimism that the “virtuous cycle” Tokyo had craved for decades had arrived.

All this encouraged the BOJ to begin exiting 25 years of zero interest rates and quantitative easing. On July 31, BOJ Governor Kazuo Ueda’s team hiked short-term rates to 0.25%, the highest since 2008. That sent the yen skyrocketing.

Since then, a clear deceleration in retail sales, exports, industrial production, machine tool orders and other sectors has Team Ueda hitting the pause button on additional tightening moves.

It also had Ishida’s government pivoting to the kinds of short-term stimulus maneuvers he claimed his government would avoid. A long-time fiscal hawk, Ishiba also was a proponent of higher rates and a stronger yen. Not anymore.

Ishiba’s reversal on these and other policies has sent the yen tumbling past the 150-to-the-dollar mark. It’s also generating increased volatility in Japanese government bond yields.

For one thing, Ishiba’s government having to rely on opposition parties to retain power makes it harder to champion fiscal consolidation and monetary liquidity normalization. For another, the clock is now ticking faster and faster for Japanese leaders to act on implementing economic reforms.

The LDP’s stumble could not be worse timed for Asia’s second-biggest economy. The export boost on which Tokyo was betting is in growing doubt as Chinese growth slows. China is slow-walking moves to address a property crisis that many compare to Japan’s 1990s bad-loan debacle.

Stephen Innes, managing partner at SPI Asset Management, notes that Beijing is “trying to talk the talk, with more noise about stabilizing the property market.” Generally speaking, though, Innes says, “China’s property mess isn’t something that can be patched up with a few speeches and half-baked measures.”

Macquarie Bank economist Larry Hu adds that measures taken so far “may not be enough to turn the housing market around.”

Meanwhile, Germany’s recession weighs on Europe’s prospects. The US is showing signs of wear. The geopolitical environment is hardly ideal as Middle East tensions flare and Russia’s Ukraine invasion drags on.

The rising odds that Trump might be re-elected on November 5 to supersize trade wars is a major source of global uncertainty.

Amid such uncertainty, investors have valid reasons to question Tokyo’s ability to get the reform process back on track. In the 12 years since the LDP returned to power, few big-picture upgrades have been implemented.

In 2012, the Prime Minister Abe pledged to modernize labor markets, reduce bureaucracy, increase innovation and productivity, empower women and strengthen corporate governance. Abe succeeded with this last endeavor.

The Nikkei’s surge to record highs is partly a result of steps to increase returns on equity, give shareholders a louder voice and diversify boardrooms. It’s also the result of ultra-low interest rates.

Yet surging stocks have meant little to the average Japanese household. Wages have generally lagged the rate of inflation. Japan ranks 30th among the 38 Organization for Economic Cooperation and Development (OECD) members in productivity.

What so-called Abenomics did, ultimately, was prove that “trickle-down economics” still doesn’t work. And that sporadic stimulus packages don’t alter economic trajectories nearly as much as structural changes. Now, the clock is already ticking as Japan’s latest government inherits a uniquely lopsided economic trajectory.

On the one hand, the inflation Tokyo had been craving for 25 years is here. And the BOJ is finally trying to normalize a super-aggressive interest-rate regime. On the other, that very rising-price dynamic is wrecking household and business confidence. It makes Japan the economic equivalent of the dog that caught the car. Consumers find themselves missing deflation, which many viewed as a stealth tax cut.

This balancing act proved too much for Kishida, who took power in early October 2021. Ostensibly, Kishida’s dismal approval ratings reflected political funding scandals within his LDP. In reality, it was mostly an underperforming economy that ended his tenure.

Like his mentor Abe, Kishida did himself no favors by prioritizing foreign policy over reforms. Ishiba, a former defense minister, irked voters by appearing to do the same. An old-school China hawk who favors creating an “Asian NATO,” Ishiba seemed more interested in creating a bulwark against Beijing than tackling kitchen-table issues.

Now, with political winds shifting, Tokyo seems even more captive to events in Beijing and Washington.

Recently, Chinese leader Xi Jinping’s government conceded that the globe’s No 2 economy is in trouble.

Earlier this month, Beijing unveiled aggressive stimulus measures to support an economy grappling with a deepening property crisis. The People’s Bank of China announced its first simultaneous cut in key short-term rates and banks’ reserve requirements since at least 2015.

Mainland stocks have tried to rally on the news. And PBOC Governor Pan Gongsheng is hinting at further cuts in the amount of cash banks must hold as reserves.

The faster Beijing puts a floor under the economy, the more Japan’s prospects will improve. China is by far Japan’s biggest trading partner. Having the top customer for your goods battling deflation is rarely a plus for economic confidence.

On top of that, the specter of Trump trade 2.0 is keeping many Tokyo officials up at night. Preparing for a Trump or Kamala Harris administration will be a major preoccupation for LDP officials. Yet not as great as figuring out whether the nation’s dominant party can find a way forward. With, or without, Ishiba in the mix.

Follow William Pesek on X at @WilliamPesek

China backs Thai success in Brics role

By: Barkar Nash

On: October 27, 2024

In: South-East Asia

Ambassador pledges economic support

PUBLISHED : 28 Oct 2024 at 04:54

China’s Ambassador to Thailand has insisted China will support Thailand’s economy, including Thailand’s hope to join membership of Brics, a league of countries that includes Brazil, Russia, India, China and South Africa.

The ambassador, Han Zhiqiang, delivered remarks on “China’s Economy from a New Perspective”, an event held recently in Bangkok by the Thai Journalists Association and the Chinese Embassy.

Mr Han said China has a unique socialist system which differs from Western welfare socialism or the former Soviet model.

China’s system integrates traditional Chinese culture with a market-driven economy, creating a governance style that is both similar to and different from that of other nations.

In recent years, China has faced economic challenges like many other countries.

To support economic growth, its government has implemented key measures, including central bank policies to lower interest rates and reduce banks’ reserve requirement ratio (RRR).

Mr Han also said additional measures have been taken to ease local government burdens, each aligning with economic stimulus goals.

Despite Western media having predicted China’s economic collapse within four decades, Mr Han said China remained optimistic about its economic outlook due to its status as the world’s largest manufacturing country and its vast consumer market.

The current set of economic goals extends until 2050, he said.

Regarding Thailand-China relations, Mr Han described Thailand as a close partner and hoped that China’s economic growth would benefit Thailand’s economy.

The Chinese merchandise that might affect small Thai businesses as competitors accounts for only a tiny portion of total market value, he said. Conversely, China’s industrial goods have created many jobs and a strong supply chain in Thailand.

The Chinese ambassador also expressed his concern about the illegal activities of certain Chinese in Thailand, reiterated that China would beef up its surveillance, and said the actions of a few groups of people should not be generalised to affect bilateral relations.

In 2025, Thailand and China will celebrate the 50th anniversary of their diplomatic ties, a significant milestone that the ambassador hopes will lead to even greater collaboration between the nations.

He said China is delighted to work on trade compliance issues, especially those related to Chinese goods saturating Thai markets.

He also said China will lend its support as Thailand looks to complete its membership journey.

Royal Barge Procession graces Bangkok’s Chao Phraya River

By: Barkar Nash

On: October 27, 2024

In: South-East Asia

PUBLISHED : 27 Oct 2024 at 17:03

Their Majesties the King and Queen travel on the Royal Barge Procession in the Chao Phraya River to present Kathin robes at the Temple of Dawn in Bangkok on Sunday afternoon. (Photo: Pattarapong Chatpattarasill)

A majestic royal barge procession graced Chao Phraya in Bangkok as Their Majesties the King and Queen travelled along the country’s main river to present traditional royal Kathin robes to Buddhist monks at the Temple of Dawn on Sunday afternoon.

The procession, the only one of its kind in the world, featured 52 barges and required 2,200 oarsmen. It was arranged in five rows and three columns, extending 1,200 metres in length and 90m in width. The fleet proceeded in the river to the sound of beautiful boat songs written especially for this occasion and sung live.

Their Majesties the King and Queen travelled on the Royal Barge Procession from the Wakusri Pier (Wat Rachathiwat Pier) to Wat Arun (Temple of Dawn). The total distance was 4.2 kilometres.

At the important Buddhist temple, Their Majesties the King and Queen presented royal Kathin robes to monks.

On the occasion, the Majesties the King and Queen were accompanied by Her Royal Highness Princess Sirivannavari Nariratana Rajakanya and His Royal Highness Prince Dipangkorn Rasmijoti.

Buddhists traditionally present Kathin robes to monks within a month after the end of the Buddhist Lent period. The Thai word Kathin means robes presented to Buddhist monks during the period.

The Royal Barge Procession and the royal Kathin presentation ceremony were organised to celebrate His Majesty the King’s 72nd birthday, which was on July 28.

Spectators from the provinces started to arrive at 14 arranged viewpoints on both banks of the Chao Phraya River from Sunday morning.

Some of them said they had been there since 4am to find the best locations to glimpse their beloved King and Queen. They said that they had viewed royal processions on television and had a strong determination to view such a special ceremony with their naked eyes once in their lifetimes.

The government did not halt traffic on five bridges over the section of the Chao Phraya River designated for the ceremony.

Yellow-clad people receive the Royal Barge Procession on the bank of the Chao Phraya River in Bangkok on Sunday afternoon. (Photo: Pattarapong Chatpattarasill)

Yellow-clad people cheer the Royal Barge Procession on the bank of the Chao Phraya River in Bangkok on Sunday afternoon. (Photo: Pattarapong Chatpattarasill)

$10,000 Gold? – Asia Times

By: Bolen C

On: October 25, 2024

In: Asia

Subscribe now for access at a special price of only $99/year.

BRICS and their limitations

David Goldman writes that while BRICS nations have discussed alternative currency-based settlement systems, financing long-term trade deficits outside the US dollar system, which has historically dominated international credit and trade financing, remains a critical issue.

Gold hedges against US dependency on foreign financing

David Goldman explains that gold is increasingly seen as a hedge against US dependency on foreign financing, especially after the US froze $300 billion in Russian reserves, which prompted central banks and private entities to diversify away from dollar reserves.

Germany’s geopolitical path being quietly redrawn

Diego Faßnacht reports that coalition negotiations in East Germany are reshaping Germany’s political landscape, challenging its steadfast NATO alignment and support for Ukraine and raising questions about the country’s future foreign policy direction.

Putin hosts Global South at Kazan BRICS Summit

James Davis highlights the recent BRICS summit in Kazan as a pivotal global event, with leaders from over 40 Global South countries and UN Secretary-General António Guterres in attendance, illustrating the failure of G-7 countries to isolate Russia’s President Vladimir Putin.

Unimagined consequences on the Korean Peninsula

Scott Foster explores the heightened tension on the Korean peninsula as a new political alignment emerges with North Korea intensifying its stance against the South and openly supporting Russia’s war effort with soldiers and weaponry in exchange for essentials like food and oil.

Karthik Shenoy joins Bank of Singapore in transformation push | FinanceAsia

By: Marcus Ching

On: October 25, 2024

In: Asia, Finance, South-East Asia

Karthik Shenoy joined Bank of Singapore as head of platforms and transformation, chief operating office, last month.

Shenoy (pictured) reports to Bank of Singapore’s global chief operating officer Jacky Ang, and has been tasked with driving the implementation of the bank’s three year strategic plan to enhance its internal infrastructure and platforms.

Shenoy has over two decades of experience in the financial services industry, and has held senior positions in both business and technology domains. Prior to joining Bank of Singapore, Shenoy worked at Credit Suisse (now part of UBS) where he was most recently its global head of financing technology and head of Asia Pacific (Apac) wealth technology. Before that, he was head of Apac banking & lending platform and head of Apac markets platform.

He has experience across markets including Singapore, Tokyo, and Hong Kong, and has been involved in conceptualising, designing and delivering complex applications and platforms involving pricing, trade lifecycle, risk, and portfolio management domains, according to a media release.

Ang commented: “Karthik’s exceptional combination of business acumen and technology expertise positions him well to drive the implementation of our three-year strategic plan in enhancing our infrastructure and platforms. His ability to collaborate well will also be instrumental in developing intricate client and front-office applications, which are critical deliverables of our three-year strategic plan.”

For more FinanceAsia people moves click here.

Citi boosts Asia markets team with two hires from JP Morgan | FinanceAsia

By: Marcus Ching

On: October 25, 2024

In: Asia, Finance, South-East Asia

Citi is adding to its Asia markets team with two appointments from JP Morgan who are both set to start at Citi in December.

Anand Goyal is set to join Citi’s FX team as head of FX institutional sales for Japan, Asia North & Australia and Asia South clusters. Based in Singapore, Goyal (pictured right) will report to Cécile Gambardella, head of sales for markets for Japan, Asia North and Australia clusters and Sam Hewson, global head of FX sales.

Goyal was previously head of macro FX (MacroX) and real money sales for Asia Pacific (Apac) at JP Morgan, where he began his career over 20 years ago, according to his LinkedIn profile.

In addition, Hooi Wan Ng will join Citi as head of markets for Malaysia. Ng (pictured left) will report to Sue Lee, head of markets for the Asia South cluster and Vikram Singh, Citi country officer and banking head for Malaysia. She was most recently head of local corporate sales and private side sales at JP Morgan, where she has served since 2011.

The upcoming move follows the appointment of Ngo Hong Minh as head of markets and country treasurer for Vietnam who joined Citi in December 2023 from JP Morgan.

Commenting on Goyal’s appointment, Hong Kong-based Gambardella said, “As Apac’s leading markets and FX franchise, we have opportunities for growth across our network. With his extensive experience and deep understanding of regional market trends, we are well positioned to further strengthen and grow our client relationships under Anand’s leadership.”

Commenting on Ng’s appointment, Singh said: “Malaysia is a key market for Citi globally, where we are seeing strong growth across our interconnected businesses. Malaysia is at the forefront of investments, both foreign and domestic, as it continues to benefit from supply chain shifts. I’m confident under Hooi Wan’s leadership Citi’s growth momentum will continue.”

Citi’s Q3 2024 results

Meanwhile, on October 15, Citigroup revealed that its net profit was $3.2 billion in the third quarter 2024, compared to net profit of $3.5 billion in Q3 2023.

The bank said this was driven by the higher cost of credit, which was partially offset by the higher revenues and the lower expenses.

Citigroup revenues of $20.3 billion in Q3, an increase of1%, on a reported basis. Excluding divestiture-related impacts, primarily consisting of the approximately $400 million gain from the sale of the Taiwan consumer banking business in the prior-year period, revenues were up 3%. This increase in revenues was driven by growth across all businesses.

For more FinanceAsia people moves click here.

Trump win potential puts Asia on a tariff-ied edge – Asia Times

By: Bolen C

On: October 25, 2024

In: Asia

Asia is suddenly starting to think about the “what-if” storm that will sweep Donald Trump and his Republican Party to win on November 5th. situations.

Despite the extremely close election in the US, Kamala Harris ‘ Democrats constantly had a statistical advantage. The GOP-controlled White House, Senate, and House of Representatives is currently influencing betting markets, which will force Asia to fight a” Trump business” circumstance in 2025.

Most Asian officials prefer Harris, as she would represent stability from Joe Biden’s administration. Trump’s industry policies alone had transform the world economic system, which is unusual.

The most immediate danger from Tokyo to Jakarta to the rest&nbsp, of export-oriented Asia is Trump’s supersized taxes. The Trump plan for a 60 % tax on China will stifle growth in Asia’s largest economy and stifle supply stores everywhere.

UBS&nbsp, Group thinks that tariff alone will cut China’s annual growth by more than half – chopping 2.5 percentage points off the gross domestic product ( GDP ) of the globe’s top trading nation. Due to weak retail spending, property purchase, and new home sales, China increased just 4.6 % in the third quarter year over year.

Over time, UBS&nbsp, analyst Wang Tao warns of the “risk of various nations raising tariffs on imports from China as well”, kicking off a prospective hands culture of tit-for-tat trade restrictions.

It’s not the end of the world, of training. As Tianchen Xu, senior analyst at The Economist Intelligence Unit, information, China’s full-year GDP target of around 5 % &nbsp, “is presently within approach with more stimulus in the third fourth”.

Despite the magnitude of these” challenges”, Xu notes,” China’s economy is not incurable as some would suggest”. However, Trump’s return to the height of massive trade wars was quickly alter that situation.

Trump has threatened to impose taxes of between 100 % and 20 % on imported cars from Mexico, and he has threatened to increase Biden’s new punitive tariffs on Chinese electric vehicles even further. But how long will it be before Chinese, South Asian and Indian-made cars face comparable Trump levies?

For maneuvers did put Thailand and other Southeast Asian export-oriented economies in harm’s way. Trump 2.0 may aggravate Thailand’s” Detroit of Asia” styles on being the leading China fence for international automakers.

According to Capital Economics ‘ chief economist, Neil Shearing, Asia is anticipating a “universal tariff on all imports to the US” as well as higher Trump taxes.

Additionally, Eastern policymakers must figure out how much more stringent the restrictions on US immigration will cost. Additionally, Trump has promised fresh tax breaks, which will only help the US’s$ 35 trillion national debt grow.

” While it’s reasonable to assume that many of Trump ‘s&nbsp, campaign pledges will be diluted&nbsp, when faced with the reality of government, the common thread running through each of these proposals is that they will end in higher inflation”, Shearing says.

By the middle of 2026, according to Capital Economics, Trump 2.0 plans could increase prices by two percentage points over recent levels. Real GDP may be roughly 0. 75 % lower while the federal funds rate would be roughly 50 basis points higher. ” Used up”, Shearing says,” this would be bad for both US bonds&nbsp, and&nbsp, stocks”.

The comments effects may be felt worldwide. Shearing notes that “emerging markets with higher levels of additional debt or northern banks that are especially vulnerable to movements in the exchange rate – somewhat Turkey, Indonesia, and, given its latest inflation problems, Brazil – would probably dial up the pace of monetary easing.”

Shearing adds that” the risk of higher tariffs, if implemented, could also have a significant impact on countries that trade with the US – Mexico, Korea, Vietnam and, of course, China— especially if Trump imposes a general tariff, which would be much harder to avoid through trans-shipment”.

Trump’s policies may have an impact on emerging markets and investment. ” Tariff concerns have been a drag on EU equities”, says Emmanuel Cau, a strategist at Barclays.

Emre Peker, an analyst at Eurasia Group, notes that&nbsp,” Trump’s threat of at least 60 % tariffs on all Chinese goods and a 10 % levy on US imports from the rest of the world, as well as his potential suspension of China’s most-favored-nation trading status under World Trade Organization rules, would stoke EU-China&nbsp, trade&nbsp, tensions as more Chinese overcapacity flows to Europe. It could also increase the pressure on European industries, which are already struggling against US and Chinese rivals, from metals to automotive, green energy, and technology.

This, Peker adds,” could put pressure on Brussels to be more forward-leaning on its own duty or tariff posture toward Beijing. Furthermore, a&nbsp, Trump&nbsp, administration would likely monitor third countries for possible trans-shipment of Chinese goods and/or circumvention of US tariffs against Chinese overcapacity, threatening additional duties on the EU and others to close any backdoors into the US market”.

One of the bigger wildcards about a Trump presidency is that the US dollar will increase, putting downward pressure on China’s exchange rate. Carie Li, a global market strategist at DBS Bank, says “markets are watching if the Trump trade is heating up and pushing the yuan back to 7.15 against the dollar.”

Some people believe there is a reason to worry about Trump. According to Bilal Hafeez, CEO and head of research at Macro Hive,” The fixed income selloff accompanying rising odds of a Republican sweep could be overdone because Trumponomics is likely to be more rational than the media conveys.”

Hafeez goes on to say that” the impact of the tariffs on inflation has been greatly exaggerated. The US is a domestic-driven economy. Consumer goods imports, excluding cars, represent only about 5 % of total consumer spending, with imports from China accounting for about 40 %”.

A 60 % tariff increase on imports from China and a 10 % tariff increase on imports from other countries could increase consumer price indices by about 150 basis points, according to Hafeez.

However, crypto bets and other assets are all being negatively impacted by Trump’s re-election specter. ” Elections remain hard to call, but if you are long crypto here, you are likely taking a Trump trade”, says Bernstein analyst Gautam Chhugani.

Most troubling about Trump 2.0 is what Asia does n’t know. Imponderables abound. Trump’s first act as president in 2017, remember, was pulling out of the Trans-Pacific Partnership ( TPP ). A President Harris, by sharp contrast, will almost certainly attend next year’s Asia Pacific Economic Cooperation ( APEC ) summit and as she did in Bangkok in 2022 declare the US a” Pacific nation”.

But it’s easy to count the ways Trump might shake up Asia’s 2025 and beyond. He would undoubtedly act to lower the dollar in order to boost US manufacturers ‘ competitiveness, for instance. That could worsen the negative effects China’s current headwinds and undermine confidence in the dollar as a global reserve currency.

Trump will undoubtedly pounce on the Federal Reserve during a second term. Trump will browbeat Fed Chairman Jerome Powell to lower rates in 2019. Trump also considered firing Powell, along with criticizing the Fed on social media. Thus, Powell injected unneeded liquidity into a struggling economy.

Recently, Trump argued that&nbsp,” the president should have at least a say in” Fed interest rate decisions. Meanwhile, the” Project 2025″ scheme that the Heritage Foundation right-wing think tank devised for Trump 2.0 favors meddling with the Fed’s mandate.

Then there’s the default risk. &nbsp, As a businessman in decades past, Trump was a serial bankruptcy filer. Trump made hints about US debt default while campaigning in 2016 and spooked Wall Street.

” I would borrow, knowing that if the economy crashed, you could make a deal”, Trump told CNBC when asked about his fiscal plans. ” And if the economy was good, it was good. So, therefore, you ca n’t lose”.

In 2020, the Washington Post reported that Trump officials, looking to punish China, mulled canceling debt held by Beijing. It’s not difficult to comprehend how catastrophic a catastrophe would be because the US national debt is now twice the size of the Chinese GDP.

Trump is not going away, even if Harris wins on November 5. There is only a slim chance that Trump will graciously concede defeat and go back to his golf courses. Trump’s legal team is already working on the election results, which could incite a 2021-like insurrection that will be staged at locations across the country.

Washington’s political polarization could lead to unexpected risks that would cause the laws of financial gravity to resurface. The last insurrection&nbsp, Trump fomented dragged Washington’s credit&nbsp, rating&nbsp, down with it. When&nbsp, Fitch&nbsp, Ratings&nbsp, yanked away Washington’s AAA status last year, it cited the insurrection as a key factor.

As&nbsp, Fitch&nbsp, put it, the chaos on&nbsp, January&nbsp, 6, 2021, was a “reflection of the deterioration in governance” imperiling US finances. The US national debt is now twice the size of&nbsp, China’s GDP, threatening Washington’s last remaining AAA&nbsp, rating&nbsp, from Moody’s Investors Service.

Here, it’s worth noting how a Trump 2.0 presidency would play into Beijing’s hands. Surely, Team Xi is n’t looking forward to Trump’s coming onslaught of tariffs. However, the ways that nations like Japan and Korea could end up as collateral damage may make China appear more appealing as a trading partner.

At the same time, the more Trump 2.0 blocks Asia’s access to US markets, the more governments in Bangkok, Jakarta, Manila, Putrajaya and Singapore might be incentivized to draw closer to Beijing.

Hence Asia’s worries about a “red wave” 11 days from now that makes economic paranoia great again. Policymakers in the region are already weighing how hard their economies would be hit by tariff-sealed US markets and how to respond as the odds of Trump’s return rise.

Follow William Pesek on X at @WilliamPesek

Krungsri chief leads sustainability thrust

By: Barkar Nash

On: October 24, 2024

In: South-East Asia

The Thai monetary institution is being elevated to international standards while ensuring its potential.

Kenichi Yamato, President and CEO of Bank of Ayudhya Public Co, Ltd., is attempting to navigate the company in a responsible direction from the conviction that the future of banking must be responsible.

Although Mr. Yamato has only been employed by Krungsri for about a month, he is determined to realize this goal and bring the Thai economic organization up to international standards.

On May 15, 2023, he was appointed to the bank’s president and chief exec, and he also serves on the board of Krungsri as an independent professional.

Mr. Yamato is a skilled professional who has spent more than 30 years in various significant positions throughout his job.

He spent the first 20 years of his career in corporate and investment banking before joining Mitsubishi UFG Financial Group ( MUFG), a Japanese international financial institution, in 1991.

From 2011 to 2016, he led MUFG’s financial planning and global techniques group. Before returning to Tokyo in March 2022, he served as the local mind for Hong Kong and afterwards as the land mind for China.

Mr. Yamato stated that the company’s goals are to enhance Thailand’s overall ecology and raise all residents ‘ quality of life.

Prior to taking over the group’s professional banking businesses in Asean, Mr. Yamato was the chief executive of global corporate banking at MUFG. Additionally, he held important posts, including as the non-executive chairman of Security Bank in the Philippines and the senator director of Bank Danamon in Indonesia.

We think green finance will be the banking industry’s potential because of the changing scenery of the industry. Our objective is to improve the quality of life for all Thais and strengthen the ecosystem nevertheless. We are not only thriving on it but even adapting to change, he said.

Krungsri intends to use the global knowledge of MUFG, its family firm, to transform into a leading green bank in Thailand.

The bank aims to become one of the country’s most responsible commercial banks and is committed to achieving carbon neutrality. Krungsri and MUFG have a commitment to achieve net-zero emissions in both its financial investment and its procedures by 2030.

Krungsri, Thailand’s fifth-largest provider by total property, believes that environmental and social ecology are essential to securing a lasting future. Additionally, the institution is committed to using its financial solutions to address social and environmental issues.

The bank has committed to a 100 billion baht green finance goal between 2021 and 2030, and we have already executed more than 76 billion baht by the middle of this time. Owing to our strategic relationship with MUFG, we’re bringing world experience to the local business”, he said.

By bringing a variety of responsible financial services and products to the Thai marketplace, according to Mr. Yamato, Krungsri is even willing to support the entire ecosystem to improve sustainability. These include sustainability-linked securities, sustainability-linked loans, natural and social securities, and Southeast Asia’s first conservation connection in the travel industry.

Mr. Yamato praised Krungsri’s pride in initiatives like the Krungsri ESG Hours and the Krungsri ESG Academy, which were created specifically to assist Thai small and medium-sized businesses ( SMEs ) transition to sustainable business practices and ensure long-term growth.

Krungsri ESG Hours recognises and supports SME entrepreneurs who align their business practices with environmental, social and governance ( ESG) principles.

In addition, the Krungsri ESG Academy offers training programs to help businesses grow change plans that adhere to ESG systems and promote long-term shifts in business operations and product offerings.

Also, the bank offers the Krungsri SME Transition Loan, in line with the Bank of Thailand’s suggestions, which is designed to support local SMEs adopt sustainable practices based on the round socioeconomic model.

Krungsri also works with regional partners to market a Thai economy that is green. The Electricity Generating Authority of Thailand and the Bank have collaborated to research and promote efficient and intelligent power options as well as methods for lowering greenhouse gas emissions.

Krungsri is even willing to support Asean member states in their transition to a sustainable market as a local gamer.

Kenichi Yamato

Bank of Ayudhya Public Company Limited ( Krungsri ) President and CEO

Banks, telcos and scam victims to share liability for losses under new framework to kick in on Dec 16

By: Marcus Ching

On: October 24, 2024

In: South-East Asia

There were also calling for more con varieties, such as malware-enabled schemes, to be covered under the foundation. &nbsp,

The government responded by saying that they would continue to concentrate on a “defined opportunity of phishing schemes where the obligations for financial institutions and telcos may be plainly set out.”

They added that the government will continue to work with habitat people and businesses to implement measures to reduce the risk of additional scams, such as “holding habitat players responsible where required.” &nbsp,

Lenders have taken a more forward-leaning approach to assessing kindness bills for clients affected by malicious hoaxes while this is being worked out, they said. &nbsp,

Given the influence and obligations these companies have over the safety of online banks and SMS programs, MAS and IMDA kept their attention on banks and telcos in response to calls for the model to include more entities like as messaging platforms and social media platforms.

However, the government uses” a complete ecosystem approach” to combat schemes, including urging social media companies to increase their efforts to stop schemes.

The government has the option of directing virtual service companies, organizations, or people to stop access to online criminal material or accounts, including scams, according to the Online Criminal Harms Act, they added.

The shared-responsibility model” may work as part of the broader set of upstream and downstream” anti-scam actions taken on by the government and businesses, the regulators said.

The MAS, for instance, is studying the feasibility of” stronger, out-of-band authentication solutions”, such as the use of&nbsp, Fast IDentity Online ( FIDO ) -compliant tokens to enhance defences against unauthorised phishing transactions.

IMDA stated that it has and will remain to collaborate with the telecom companies. Over 20 million SMSes have been blocked since 2023 as a result of actions like the compulsory SMS Sender ID Registry and anti-scam screen.

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