Muted effect:
CEO says flow of goods and services remains largely intact
DBS Group Holdings Ltd chief executive officer Piyush Gupta says fears about the impact of the US-China trade war are ‘somewhat overblown’ for now as the flow of goods and services remains largely intact.
SINGAPORE: DBS Group Holdings Ltd’s chief executive officer said fears about the impact of the US-China trade war are “somewhat overblown” for now as the flow of goods and services remains largely intact.
“The direct impact will not be very material,” CEO Piyush Gupta said in an interview with Bloomberg Television yesterday.
It’s “very hard to shift supply chains”.
Gupta, 58, spoke on the sidelines of a Bloomberg forum in Singapore, where participants are debating the economic and commercial effects of trade friction stemming from the Trump administration’s policies.
The stakes are high for DBS, which is among the five biggest trade finance banks in Asia by market share, according to Greenwich Associates research.
Gupta said that in technology, for example, it takes three to four years to adjust manufacturing supply chains, and even for lower-end goods like refrigerators and vacuum cleaners, it may take 12 to 18 months. The bigger concern is the potential for things like the financial-market sell-off to create a “feedback loop”, he said.
South-East Asia’s biggest bank is keen to seize business opportunities from China’s growing global footprint, Gupta said.
Most of DBS’ activities “tend to be outward bound” in China, where the bank serves corporate customers, he said.
President Xi Jinping’s Belt and Road infrastructure initiative and the internationalisation of the yuan present opportunities, he said.
DBS has arranged equity capital funding and real estate investment trust (REIT) transactions for Chinese companies outside their home market, Gupta said.
The domestic Chinese REIT market could become bigger than the US’ at some point, he added.
Still, he said it will remain tough for foreign banks to penetrate the domestic market given that they only have a combined 1% share. “Your ability to be relevant to local companies tends to be somewhat limited,” he said.
Meanwhile. Europe’s Airbus SE indicated yesterday that it did not expect a sales windfall from trade tensions between China and the United States, with the manufacturer’s China head saying there would be “no winner” from a prolonged economic conflict.
Airbus China CEO George Xu said such tensions would hurt aviation growth by depressing middle class incomes.
“I am Chinese and we don’t like this kind of trade war,” Xu said at a news conference in Zhuhai, China.
“Nobody will be the winner in this kind of trade war.”
Airbus has been trying to unlock talks with China over a long-delayed deal to sell up to 180 jets, and its board in September held an unusual meeting in China. — Agencies