Trade tensions are ratcheting higher, with the US particularly focused on China’s supply chains and will impact value added producers in Asia, Mitul Kotecha, Senior Emerging Markets Strategist at TD Securities.
Key Quotes
“It is hard to see China or the US backing down in relation to the “Made in China 2025” policy, implying more pain.”
“Asia’s trade dependency is high while Intra-Asian trade is also significant. Many countries utilise a surprisingly large share of foreign inputs in their exports.”
“Examining “Trade In Value Added” shows that Korea, Japan and Taiwan will be most vulnerable in terms of supply chain disruptions and valued added trade.”
“KRW and TWD will continue to be highly sensitive to CNY depreciation.”
“The impact on the JPY is complicated by its role as a safe haven, suggesting upside risks to JPY as trade tensions intensify.”
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