The protectionist stance the new US administration is expected to take has dampened the outlook for emerging markets such as Latin America and eastern Europe, however AllianceBernstein (AB) portfolio manager Brad Gibson said the firm didn’t “share the widespread pessimism” on Asian markets.
“Far from creating a vacuum in Asian trade and investment, a scaling back of US engagement with the region would leave more room for companies from China, India and Japan to pursue their ambitions there,” he said
Additionally, AB said the proposed tariff on Chinese goods was unlikely as it would “increase the cost of technology and other goods for US consumers” and would be difficult to implement due to the complexity in global supply chain structures.
“Many iPhone component manufacturers, for example, are based in Asian countries outside China, and the cost of relocating such manufacturing processes to the US would be prohibitive in the short term,” noted AB chief investment officer for Asia-Pacific ex Japan equities Stuart Rae.
“Our base case is that the US will make some well publicised moves against steel and auto imports,” he said.
“These industries account for a relatively small proportion of Asia’s exports, however, and such measures are more likely to hurt Mexico, in the case of autos, than any Asian country.”
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