The impact of a Joe Biden presidency on Asia is the softening of market tensions, according to a chief executive of a major Asian bank.
Piyush Gupta, chief executive of DBS Group Holdings, Southeast Asia’s largest bank by assets, said that a Joe Biden presidency may mean maintaining a firm stance on China U.S. rhetoric but with gentler rhetoric.
NBC projections show that as of the writing, Biden has taken 253 electoral votes while President Donald Trump has sealed 214 electoral votes.
Gupta said that Biden's triumph could pose a major question for investors about whether his China agenda will be different from Trump’s.
“My view on that is in substance, it is unlikely to change very much. I think the issues relative to China have bipartisan support in the U.S., so you’ll likely continue to see a swath of policies which focus on the same things: Trying to get China to open up its markets and a more level playing field,” Gupta said during an interview on CNBC’s “Capital Connection.”
“However, I think what will change is the rhetoric,” said Gupta, noting that Trump’s tweets and actions “keep people on edge” which lead to markets getting antsy.
A Biden administration could normalize how messages are expressed and actions are taken, according to Gupta. At the same time, Biden is also more likely to work with trading partners, especially those in Europe, he noted.
“So, net-net, while it’s not clear to me you’d see a reduction in tariffs or a major shift in the China stance, I think the softening of the rhetoric and the way of engagement will soothe the markets’ nerves,” he added.
Gupta said that several East Asian economies were able to manage Covid-19 outbreaks and that has allowed some economic activity to resume.
That situation allowed DBS to surpass expectations on its third-quarter earnings. The bank’s net profit for the quarter dropped by 20% year-on-year to $957.3 million, which is better than an average of $861.5 million estimated by Refinitiv.
The "real game"
For Karim Raslan, founder of KRA Group, China is the “real game” in terms of business for Southeast Asia.
“It’s quite clear that China matters so much more than the U.S.,” said Raslan, responding to the question about the impact of the possible win of Democratic presidential candidate Biden on Southeast Asia.
“Actually, to be frank, I don’t think Southeast Asians really care,” he said during his interview on CNBC’s “Squawk Box Asia” on Wednesday. “Southeast Asians have already experienced an enormous boom in bilateral trade with China.”
“The U.S. is a sideshow. It’s important for geopolitics, but the real game in terms of business — and these are mercantilist nations — is China,” he added, justifying why China is the “real game.”
Raslan explained that Southeast Asia is China’s largest trading group, after exceeding both the U.S. and the European Union in 2020.
Aberdeen Standard Investments’ Head of Asian Sovereign Debt Kenneth Akintewe echoes the same sentiment as Raslan's, saying Asia investors must focus on the region’s “robust” data instead of the U.S. election results.
“I find it amazing that we’ve sat here for two days discussing … elections and I’ve barely heard anyone talking about the data,” he said during his interview on CNBC’s “Street Signs Asia” on Thursday.
“For Asia, it’s very important to remember that the elections is actually not the most important thing going on,” he said, urging Asia investors to focus on the region’s economic performance instead. “The data is one of the most important things going on.”
