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Collateral damage of the Sino-US trade conflict

Kam Wei NG

Although the focal point for trade tension this time is between China and the US, collateral damage on the regional economies is rising. In particular, Asia’s export-oriented economies are not immune to tighter USD liquidity stemming from risk aversion resulted from the Sino-US trade tension. The financial stress is seen in the year-to-date decline in Asian currencies against the USD (Chart 1). The collateral damage of the Sino-US trade friction clearly has risk implications on regional asset allocation.

A slowdown in global growth due to the Sino-US trade war will lead to a loss of demand for emerging market (EM) exports. A recent market study finds that in Asia GDP growth of Singapore, Malaysia and Thailand are the most sensitive to shifts in G3 (US, Europe and Japan) growth

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