English

     

    asian markets: six trends as tariffs hasten economic progress

    the next leap forward
    the next leap forward·a boon for Asia·after the bell·author·explore more·contact us

    the next leap forward.

    Asian economies and companies have always progressed in quantum leaps due to the region’s record of using strong infrastructure development, education, industrial policies and, most significantly, manufacturing to make rapid advances. We see the latest US tariff developments and trade war helping Asia’s next leap forward and potentially hastening Asia’s economic advance through six key trends playing out over the long term.


    greater technological independence and leadership.  North Asian companies are at the fore of advanced manufacturing, robotics, AI and green technologies. Protectionist policies could mean such firms will move from being one part of the global supply chain to leading it via own-brands from smartphones to EVs. 
     

    related content.

    nature: inelastic food demand underpins real-asset resilience

    hedge funds: the move away from portfolios built for globalisation

     

    increased trade within Asia. Asia is set to comprise 60% of global GDP by 2030 from its current 55% and intra-regional trade is now expected to rise to 65%, or USD 400 billion per year by 20301. The Regional Comprehensive Economic Partnership covers 15 economies in Asia-Pacific and has resulted in nearly 60% of Asia’s trade being conducted with regional partners. 
     

    greater trade with ‘global south’. China recorded a record trade surplus of USD 1 trillion in 2024 and its exports to the US represent less than 15% of its total exports. US trade policies will inadvertently promote greater trade, investment and cooperation between the global south and Asia.
     

    going global faster. Higher tariffs are encouraging Asian companies to expand globally more quickly. Firms are establishing plant and production facilities globally rather than relying purely on exporting. One example is the growth and globalisation of the Chinese automotive industry.
     

    read also: climate equities: transitioning companies vs the rest


    hastening domestic consumption patterns. Asia has a high savings pool at 27% of regional GDP and China’s housing savings pool has risen to USD 20 trn2. Policy in Asia now seeks to mobilise greater domestic consumption especially via digital services growth.
     

    reduced reliance on commodities and the dollar. Asia is accelerating its development of renewable or self-sourced energy, reducing the drag on its current account from global imports of energy and other products in dollars. India has even utilised this tactic to attract record foreign investment in its green energy sector.

     

    ​​​​​​​a boon for Asia.

    These trends lead us to believe that the trade war will cause divergence that provides a boon for Asia. In public equities, investment opportunities are multiplying amid newer and stronger business models. A growing pool of Asian capital remains keen to invest domestically in Asian fixed income and public equities. We see this signalling a shift in valuations occurring over multiple years.  
     

    read another asset class view

    after the bell.

    What do you think should be keeping other investors up at night? 

    Global investors, including Asian ones, have been extremely pro US assets over the past few years. Our team in Asia believes that investors should now ask: how did the US as a country become so complicit and nonchalant about the state of the presidency and the country’s leadership? Why are there so many false narratives and why are US institutions decaying? Where is Congress in all of this, and are there no longer any checks and balances in the US? Why has the Republican party supported this administration, and the majority of US voters championed this quality of leadership? These issues provide plenty for investors to lose sleep over.

    author.

    LOcom_AuthorsAM-Dhiraj.png

    Dhiraj Bajaj
    CIO, Asia Fixed Income and Equities 

    contact us.

    Please enter your first name.

    Please enter your last name.

    Please enter your company name.

    Please enter your job title.

    Please enter a valid professional email address.

    Your information will be used accordingly to our Privacy Statement


    sources.

    1 International Monetary Fund (IMF).
    2 Asian Development Bank (ADB).

    Lombard Odier Fleuron

    important information.
    For professional investors use only
    This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice.
    Read more.