Although a US-China trade dispute has increased uncertainty in the Asia-Pacific region, Asian economies have been growing faster than in Europe and the US, a Citigroup Inc official said yesterday.
Many Asian corporations are operating multinationals with the bank’s help, as Citi provides diverse financial tools for its clients, Citi Asia-Pacific markets and securities services head Stuart Staley said in an interview in Taipei.
However, as the trade dispute escalates, the region has moved into uncharted waters, with people looking for evidence to decide whether the macroeconomy will keep growing or fall into a recession, Staley said.
Photo: Kao Shih-ching, Taipei Times
“We have seen some investors stay on the sidelines, less willing to exploit the risks, and more corporations hesitate over whether to invest, as they do not know what the investment environment will look like in the future,” Staley said.
All of this has slowed activity, he said.
While some analysts have suggested that investing in Southeast Asia would be a solution to avoid trade issues, Staley said that tariffs have forced firms to reassess their supply chains.
However, due to the uncertainties, he has not seen many of his clients move to the region, he said.
Those that already have production capacity in the region, such as in Vietnam, might increase production there to avoid high tariffs on items made in China, he said.
However, those that do not have production bases in the region are more cautious, as they do not know what the trade dispute might become and are concerned about whether they could create a new supple chain in ASEAN, Staley said.
The US and China are expected to reach an agreement at some point, as the effect of the tariffs is so great for many companies worldwide, he said.
Asian firms are expanding operations into Asian countries outside China amid the trade dispute, creating “Asian-to-Asian trade,” and Citi, with its networks, has been helping these multinationals operate in those nations, Staley said.
“We help them with payments, cash management and other financial services. They have contributed to strong economic momentum for the region,” he said.
Through Citi’s network spanning more than 98 nations, it helps provide institutional investors access to global and local markets, he said.
With trading floors in more than 80 nations, along with clearing and custody networks in more than 60 countries and connections with 400 clearing systems, Citi maintains one of the largest global financial infrastructure platforms, with more than US$4 trillion in average daily cashflow, he said.
The bank faces some challenges in the region, as benchmark interest rates in Asia-Pacific are comparatively low, which increases pressure on some of Citi’s financial products, Staley said.
However, overall, Citi’s markets and securities services have been reporting fast growth in Asia, he said.
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