How Singapore Businesses and the rest of Asia Reacted to Trump’s Win in the U.S

It came as a surprise even to the most disinterested observers. A few days to the U.S Election Day, everything seemed to be going Clinton’s way but surprisingly Donald Trump managed to pull a last-minute-surprise that shocked the world. In Singapore, the Prime Minister Lee Hsien Loong was among the first to congratulate the president-elect but he also noted it was a surprise.

The ‘America First’ President

Image result for trumpWhile the rest of the world is seeking global connections, Trump has been categorical in his anti-globalization stance. Some of the countries in Asia that have been on his radar include China and MPM Capital Singapore SME Business Loans. It is no wonder this is where the first impacts started being felt when the Republican won key battleground states including Florida, North Carolina and Ohio.

Markets Tank

Across Asia like the rest of the world, the effects of Trump’ victory were immediate. In Singapore, US Stock index futures sales were pushing losses to the limit as it became clear Clinton was losing and this was replicated elsewhere across Asia. The Strait Times Index slumped 1.4% as at 2,781.31 slightly before 4pm on November 9th. Earlier the Index had tumbled 2.3%, which was the lowest since the other surprise vote in Britain.

In Japan, things were not better with the stocks crumbling 5.4% by close of trade. Hong Kong on the other hand tanked down 3% while Shanghai seemed to hold strong with only a 0.6% decline. Seoul slumped 2.3%. The results in the market are expected considering Hillary Clinton had been the favorite of most Asian countries except for China.

A study by the Global Times in March showed that most people in Singapore, Taiwan, Japan, South Korea, Indonesia, Malaysia and Thailand preferred Clinton to Trump. This was due to the anti-Muslim stance that Trump had taken early in the campaigns. The results also come from economic fears that have been elicited by the America First rhetoric that trump has been propagating.

Analysts now fear that Asia is still going to feel the aftershocks of Trump’s victory for weeks or even months as he defines his policy. One of the greatest fears is of course the scrapping of the Trans-Pacific Partnership (TPP), which was at the core of Obama’s pivot Asia campaign.

With countries like Singapore going through turbulent economic phases, these markets cannot afford to lose any more markets for their commodities. This means the immediate slump in the markets is just a beginning, and people have started taking quick business loans

Is Trump’s Victory Bad News for Asia?

Image result for trumpThe results are in and the world has to accept that Trump is the president-elect. The brash billionaire has already been hosted by the outgoing president at the White House and it seems the impact of his presidency is now starting to emerge. In Singapore and the rest of Asia, the news of his election jolted the markets from Tokyo, Hong Kong to Shanghai. Asia has been a key issue during the campaigns and Trump has not hidden his disdain for alliances and trade pacts formed by the past administrations with the region.

A Shell-shocked Region

Before November 8th, the entire Asian region was largely pro-Clinton except for China, which always has an ambiguous relationship with the U.S. The former secretary of state represented the status quo and it is obvious Singapore and the rest of Asia did not want things to be ruffled. It is no wonder then that Trump’s victory shocked the region.

Immediate Impact

To assess the future impact of a trump presidency in Asia, you have to look at how the markets reacted in the region. All regional markets in Asia closed low and money was moving to safe haven stocks such as gold and currencies such as the yen. Japan’s Nikkei 225 took a hit with a 5.4% drop while the Hang Seng in Hong Kong lost points closing at 2.2% from the previous session. The Kospi in Singapore closed 2.7% lower and even in Shanghai the Composite lost 0.6%.

What Trump Really Means for Asia

It is true the markets are recovering remarkably, but this is just a temporary correction according to economic experts. During the campaigns, Trump was categorical that China will be labeled a currency manipulator something that will greatly affect the two super power’s relations. In Singapore, China, India and Taiwan, there are fears of job losses if American companies are forced to return operations to their homeland.

The president elect promised to slap American firms abroad with heavy penalties and this will force them to cut down operations in Asia. China is also worried about the proposed punitive tariffs of its products by Trump because this would hurt its economy badly. If China suffers, the rest of the region will feel the impact as has been witnessed over the last two years. If these tariffs are imposed on South Korea and Japan, things will only get worse for the Asian economy.

Truth be told, there are many uncertainties about what Trump will do and what he won’t but one thing is clear; Asia is holding its breath hoping the president will not make good his threats.

Top 10 Happenings in the Singapore Business Economy for 2018

The start of the year 2018 for Singaporeans was not all that uplifting. It came amidst a gloomy forecast from global and local financial analyst and by the end of quarter one the prediction had come to pass. The country faced slow growth and the Monetary Authority of Singapore (MAS) was forced to downgrade its earlier predictions for the New Year.

However, the recent announcement by Ministry of Trade and Industry (MIT) is bound to uplift the spirits in the city state as a quicker growth pace is reported. The gross Domestic Product (GDP) grew by an annualized 0.8 percent from the first quarter according to the estimate from MIT. This comes amidst the backdrop of the Central Bank easing policy back in April with the next review coming in October.

What’s coming up?

The expanding GDP has forced analysts to explain the unusual trend with most saying a rebound in services is the main reason for the positive growth. The median forecast by a Bloomberg survey earlier was 0.9% as reported by SingBusinessLoan.com but there was still a large segment of economists who had projected growth in Quarter 2 to hit only 0.2 percent.

Despite the expansion in GDP questions are still being raised over the longevity of the trend. The global uncertainty caused by Britain’s exit of the European Union (EU) have seen major upheavals in major financial hubs of which Singapore is one.

Moving forward

Singapore Business EconomyFor trade-dependent Singapore its vulnerability to capricious global market demand raises the question on how long the second quarter’s improvement in GDP is going to last. Some analysts are of the view that the ripple effects of Brexit are not reflected in the pick-up in the economy and this might just be a temporary relief.

The service industry has been cited as the main influence in the pick-up. Transportation, retail trade and finance among other sectors expanded an annualized 0.5% a contract to a 4.8% contraction experienced in the same sector within the three previous months.

This growth contrasts sharply with a contracting manufacturing sector which fell to 0.3 percent from 18.4 percent within the same period. Strong motor vehicle sales boosted the retail trade sector and played a major role in the service industry growth. Overall the country’s economy expanded 2.2 percent in Q2 2016 which is in line with economists surveyed by Bloomberg.

In line with this improvement Monetary Authority of Singapore (MAS) announced it will not seek a currency appreciation during its April as it eased its policy stance.

 

China’s Banking Industry Reels under Highest Bad Loans Levels Since 2004

The increasing demand for financial integrity amidst a slowing economy has revealed that China’s Banks are grappling with a bad loan academic of unprecedented levels. The high levels of quick business loans are not only confined to the large commercial entities as even lower-tier banks are affected with some reporting delinquency rates of 20 percent on their books.

The situation at the larger institutions is no different with reports showing that the impact of the slowdown is affecting more people and corporates who are now unable to repay their loans. Three of the largest commercial banks in the country have already raised an alarm over the situation. In March, Industrial and Commercial Bank of China (IDCBF) released its loan performance report indicating non-performing loans spiked 44% in 2015 from the previous year.

IDCBF’s major rivals Bank of China (BACHF) and China Construction Bank (CICHF) decried a similar state of affairs with non-performing loans at BACHF jumping 30% and 47% at CICHF from 2014. The bad loans epidemic reaching $29 trillion are now a major of concern with the industry reporting $1 trillion losses. This is the lowest level since the onset of the global financial crisis around 2004.

China's Banking Industry Reels under Highest Bad Loans LevelsWhile these large banking institutions are still making billions in profits to cover expected losses, there was hardly any growth in 2015. For instance, in 2015, China Construction Bank’s profits grew by just 0.1% from 2014. As the gloomy picture continues to unravel, there are fears that things could get worse. Banks such as the Bank of China (BACHF) have already issued profit warnings for 2016. The situation is reflected across the entire banking sector in the country.

At the same time, there are worries that the official numbers don’t even portray the real picture. CLSA (Credit Lyonnais Securities Asia) in its report indicates the official bad loans statistics being bandied around might not be a true reflection of the situation on the ground.

The brokerage firm says nonperforming loans are at least 9 times what the official figures are indicating. CLSA believes that nonperforming loans accounted for 15%-19% of outstanding credit in 2015.  Potential losses in the banking industry might reach 6.9 trillion Yuan to 9.1 trillion Yuan based on public records of listed companies.

The reports on non-performing loans come in the backdrop of an earlier warning by the Governor of China’s Central Bank who decried the increase in overall debt levels among corporations. The reasons for the bad debt rise, according to a PWC Report, can be attributed to a 5-year loan consumption binge, the slowing economy among other factors.

While the Chinese officials are talking about options to relieve the huge debt burden by corporations, financial analysts are pessimistic about what measures can make an impact.