Pinoy businessmen unfazed by Trump’s ‘America first’
Some Filipino businessmen do not see any reason to be alarmed over the “America first” pronouncement of new US President Donald Trump as opportunities for the Philippines may even arise from it.
In Davos, Switzerland where the World Economic Forum was held, US bankers, buoyed by a resurgence in profits, are advising their counterparts in Europe to think positively about the new administration of Trump.
Philippine Chamber of Commerce and Industry (PCCI) president George Barcelon said the “protectionist” statements made by Trump could trigger more trade and investment opportunities for the Philippines from other global powerhouses who might be turned off by the developments in the US, the world’s largest economy. The PCCI official told The
STAR the statements Trump made were mostly aimed at China, the second largest economy next to the US.
Barcelon said it is US trade with China that might be in the crosshairs with Trump’s pronouncements.
“He is always saying China is unfair and they play with their exchange rate to benefit them. What Trump is threatening… is imposition of tariff ( on China),” Barcelon said. “If they will really impose that, it would indirectly benefit us because if that is going to happen, the Chinese would probably come to the Philippines and invest. Here is where they could be running. Their trade and investment interest could be diverted to us so of course we benefit,” he added.
The Philippines under the leadership of President Duterte has recently renewed its ties with China after years of tension due to territorial and maritime disputes. As far as the country’s exports to the US is concerned, meanwhile, PCCI honorary chairman and Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. said Trump’s statements were “nothing new” and should not be a cause of concern among exporters.
“Our exports to the US are not that big so a little change will easily be covered by China and Japan. So we should not be worried about it. Maybe, the other Asian countries should but I don’t think we should be, especially that Trump and Duterte seem to strike (it off) well with each other,” Ortiz-Luis said.
“The fact remains that at the end of the day, businessmen will decide on what they will do,” he added.
According to Barcelon, the products the country exports to the US are “those things that they cannot really afford to make,” which should make exporters a little more optimistic. “But the service industry is a different matter. Over time, they would probably use artificial intelligence to lessen their dependency on foreign back office support, but that would take some time,” he said, apparently referring to the business process outsourcing (BPO) industry. Trump was sworn into office as the 45th US president last Friday. His pronouncements in his inaugural speech that he would push for “buy American, hire American” or “America first” policy sent jitters all over the world.
But despite early indications of his leadership style, the local business community said it might really be too early to judge and project what he would actually do. “It is still too early to react. We need to see what actions the Trump administration will actually take,” Makati Business Club chairman Ed Chua said.
For its part, the American Chamber of Commerce in the Philippines (AmCham) said US firms have invested in the Philippines for over a century in step with Philippine economic growth and they intend to continue doing so in the coming years.
“We support globalization and believe the American economy can become stronger without being isolationist,” AmCham Philippines senior advisor John Forbes said.
Think positive
At the WEF, the annual gathering of the world’s political and business elites in Davos, US financiers told investors and overseas’ rivals to focus less on Trump’s anti-globalization rhetoric and more on his Cabinet picks, comprising of Wall Street veterans and corporate bosses.
But many Europeans still need convincing.
Many European bankers fear Trump, who campaigned on an “America first” platform and who has threatened to impose punitive tariffs on Chinese imports, could trigger a trade war with the world’s second-largest economy.
Jose Vinals, chairman of Standard Chartered Bank and a former deputy governor of the Spanish central bank, said there was a lot of unease over whether the Republican’s campaign rhetoric would translate into his policies as president.
“In Europe, there is concern and trepidation about Trump’s administration and how his politics will affect global trade and finance,” he told Reuters.
“Any form of protectionism will likely ultimately make the US economy less competitive and be bad news for the world,” said Vinals, who has previously built up an expertise on Asian markets, including China, while working as a senior official at the International Monetary Fund.
But Mary Callahan Erodes, who runs the asset management arm of US bank JPMorgan, sought to assuage concerns about the incoming White House administration.
She told the WEF that Trump’s officials, including former Goldman Sachs bankers Steven Mnuchin and Gary Cohn, would push a pro-business agenda that would drive economic growth.
“We are going to have to get used to thinking very proactively and getting excited about growth,” she said. “It is a pendulum swing and it is going to be positive for business. It just is.”
Anthony Scaramucci, a hedge fund manager who has been appointed by Trump to liaise with the business community, was the only member of the new US administration to attend the Davos forum.
He spoke publicly about how Trump would be good for the global economy and, according to banking sources, followed this up with private discussions with European bankers. But the sources said industry players in Europe wanted more clarity on key US economic policies from Trump himself.
Banks on both sides of the Atlantic might be happy at having a leader in the White House who has pledged to cut tax rates and ease restrictions imposed on banks’ risk-taking in the wake of the financial crisis.
Trading strength
At private lunches and evening cocktail receptions in the Swiss ski resort, some US financiers expressed concern about the impact from Trump’s blunt re-evaluation of key foreign policy principles and his penchant for castigating American companies on Twitter.
Most bankers expect volatile market swings in 2017 after investors, having driven up stock prices in anticipation of tax cuts and spending hikes, grow impatient for action.
Increased volatility plays to Wall Street banks’ greater strength in trading bonds, stocks and currencies.
US investment banks have already reported bumper fourthquarter results following a surge in trading volumes across commodities, interest rate products and foreign exchange as investors reworked their portfolios in response to Trump’s surprise victory and the Federal Reserve’s interest rate hike.
Goldman Sachs, the bank most dependent on trading, has seen its stock rise nearly 30 percent since the Nov. 8 election.
European banks have not yet reported fourth- quarter earnings but their shares have also have been boosted by the US developments.
The region’s banking index is up 15 percent as investors bet banks such as Barclays and Deutsche, which have US investment banking operations, will get a boost from increased trading and deal action.
To be sure, some European bankers reflected that sunnier outlook in Davos, saying Trump was good news for banks.
“He wants banks to have more say in economic growth and I fundamentally think that is an inextricable link combination, you don’t have strong economies in the long run without strong banks, and vice versa,” Antonio Horta-Osorio, the chief executive of Britain’s Lloyds, said.
“Banks are for the economies like blood is for the body and, therefore, I see that as very positive,” he said.