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Manufacturers looking to move out of China to countries like Bangladesh: BNP Paribas strategist
FILE PHOTO: Aides set up platforms before a group photo with members of US and Chinese trade negotiation delegations at the Diaoyutai State Guesthouse in Beijing, China February 15, 2019. Mark Schiefelbein/Pool via REUTERS
Trade tensions with the US are forcing many manufacturers to look to move out of China to countries like Bangladesh, according to a BNP Paribas official as a Thomson Reuters/INSEAD poll finds Asian business confidence at a 10-year low.
The United States and China have been embroiled in a trade standoff since last year, marked by tit-for-tat import tariffs, as Washington looks to force Beijing to make changes to its business policies. Talks between the two to reach a detente ended last month without a deal.
Washington's move to put Huawei, the world's No.2 maker of smartphones, on an export blacklist that bars US companies from doing business with the Chinese firm without special approval further ratcheted up tensions.
Still, US President Donald Trump has said that a deal would "eventually" be struck.
BNP Paribas, however, does not expect a resolution to the trade war this year, said Hong Kong-based Manishi Raychaudhuri, Asia-Pacific equity strategist at the banking group, according to a Reuters report published on the poll on Wednesday.
Many manufacturers looking to move production out of China and into countries such as Bangladesh, Vietnam and Taiwan, Raychaudhuri noted.
These changes, however, "can't be made overnight", he added.
China's economy is already feeling the heat, with industrial output growth sliding to a 17-year low in May.
Citing the survey, Reuters said confidence among Asian companies in the June quarter fell to its lowest since the 2008-09 financial crisis, as the US-China trade war disrupts global supply chains and shows little sign of easing soon.
The Thomson Reuters/INSEAD Asian Business Sentiment Index tracking companies' six-month outlook worsened in the three months ended June to 53, versus 63 in the previous two quarters.
A reading above 50 means optimistic respondents outnumbered pessimists, but worries about the threat of a prolonged trade war drove the index to its lowest since the June quarter of 2009, when the first edition of the survey was released.
"There was a big dip (in the index) three quarters ago, and we felt it was the uncertainty about the trade war and people were worried about the future," said Antonio Fatas, a Singapore-based economics professor at global business school INSEAD.
"We get a sense after four quarters of low numbers that now, it's not just uncertainty. This is a true slowdown in growth. We see activity declining — it's not just the expectation that activity will decline," Fatas added.
For a fourth straight quarter, survey participants cited the global trade war as the chief risk to business, followed by Brexit and a slowdown in the Chinese economy.
The survey interviewed 95 companies in 11 Asia-Pacific countries that together contribute about a third of global gross domestic product and are home to 45% of the world's population.
Companies surveyed from May 31 to June 14 can change from quarter to quarter, Reuters noted.
Respondents to the survey included Japan's Nikon Corp, South Korea's Samsung Electronics, India's Tata Consultancy Services and Reliance Industries Ltd, as well as Thailand's PTT PCL.
- News Desk, bdnews24.com
Published: 2019-06-19 22:27:07 BdST
FILE PHOTO: Aides set up platforms before a group photo with members of US and Chinese trade negotiation delegations at the Diaoyutai State Guesthouse in Beijing, China February 15, 2019. Mark Schiefelbein/Pool via REUTERS
Trade tensions with the US are forcing many manufacturers to look to move out of China to countries like Bangladesh, according to a BNP Paribas official as a Thomson Reuters/INSEAD poll finds Asian business confidence at a 10-year low.
The United States and China have been embroiled in a trade standoff since last year, marked by tit-for-tat import tariffs, as Washington looks to force Beijing to make changes to its business policies. Talks between the two to reach a detente ended last month without a deal.
Washington's move to put Huawei, the world's No.2 maker of smartphones, on an export blacklist that bars US companies from doing business with the Chinese firm without special approval further ratcheted up tensions.
Still, US President Donald Trump has said that a deal would "eventually" be struck.
BNP Paribas, however, does not expect a resolution to the trade war this year, said Hong Kong-based Manishi Raychaudhuri, Asia-Pacific equity strategist at the banking group, according to a Reuters report published on the poll on Wednesday.
Many manufacturers looking to move production out of China and into countries such as Bangladesh, Vietnam and Taiwan, Raychaudhuri noted.
These changes, however, "can't be made overnight", he added.
China's economy is already feeling the heat, with industrial output growth sliding to a 17-year low in May.
Citing the survey, Reuters said confidence among Asian companies in the June quarter fell to its lowest since the 2008-09 financial crisis, as the US-China trade war disrupts global supply chains and shows little sign of easing soon.
The Thomson Reuters/INSEAD Asian Business Sentiment Index tracking companies' six-month outlook worsened in the three months ended June to 53, versus 63 in the previous two quarters.
A reading above 50 means optimistic respondents outnumbered pessimists, but worries about the threat of a prolonged trade war drove the index to its lowest since the June quarter of 2009, when the first edition of the survey was released.
"There was a big dip (in the index) three quarters ago, and we felt it was the uncertainty about the trade war and people were worried about the future," said Antonio Fatas, a Singapore-based economics professor at global business school INSEAD.
"We get a sense after four quarters of low numbers that now, it's not just uncertainty. This is a true slowdown in growth. We see activity declining — it's not just the expectation that activity will decline," Fatas added.
For a fourth straight quarter, survey participants cited the global trade war as the chief risk to business, followed by Brexit and a slowdown in the Chinese economy.
The survey interviewed 95 companies in 11 Asia-Pacific countries that together contribute about a third of global gross domestic product and are home to 45% of the world's population.
Companies surveyed from May 31 to June 14 can change from quarter to quarter, Reuters noted.
Respondents to the survey included Japan's Nikon Corp, South Korea's Samsung Electronics, India's Tata Consultancy Services and Reliance Industries Ltd, as well as Thailand's PTT PCL.
