One of President Donald Trump’s first actions upon taking office was to formally withdraw the US from further participation in the TPP.
This has been seen in some quarters as negative for Asia’s exporters and equities markets but Pidcock, manager of the Jupiter Asian Income Fund, argued the fears are overblown.
“Is anybody surprised that the Trans-Pacific Partnership has fallen apart?,” Pidcock said. “Whether it was going to be a Trump or Clinton presidency, both candidates had always been open and vocal opponents of the TPP – and with the largest member now officially withdrawing, what remains is a club that perhaps simply isn’t worth being in.”
“Yet while trade protectionism from the West will have an impact on Asia, the effects are in my opinion less pronounced than one would imagine: over half of all Asian trade is done within the region, a figure unmatched even by North America itself,” he continued. “That tells you that where Asia was once heavily reliant on Western demand, that story is quickly being overtaken by local consumption.”
Pidcock also noted that it was ‘no coincidence’ that China’s Premier Xi Jinping turned up at the World Economic Forum in Davos last month, the first time a Chinese head of state has attended.
“Investors should take note when a communist is championing free trade in a gathering for global capitalism; with the US out of the picture, and the European single-market having the potential to crumble under the possible collapse of the EU, China will be looking to take charge of this situation by tilting power eastward,” he said. “The 16-nation Regional Comprehensive Economic Partnership it is advocating is proof of this, and if successful would firmly establish Asia Pacific as the world’s trading powerhouse.”
