To The Moon

The steeper-than-expected sweeping tariffs imposed by the US may weigh on Asian equities in the short term, as they dampen the regional growth outlook and raise the risk of retaliatory tariffs from affected Asian countries.

The Asia-Pacific region, characterized by its export-driven economies, is expected to face headwinds if global trade activity slows.

Chinese-owned factories may also need to reconsider their relocation strategies, as Southeast Asian countries—including Vietnam (46%) and Cambodia (49%)—are also subject to higher US tariffs.

China

• China now faces a hefty 34% reciprocal tariff on exports to the US, in addition to the existing 20% tariff.

• Although improving corporate earnings, rising investor sentiment, attractive valuations, AI-driven productivity gains, and government stimulus may help cushion the impact of the tariffs, the Chinese stock market could still underperform in the near term due to potential retaliatory measures against the US and a deteriorating growth outlook under the new US tariff regime.

• The silver lining is that Trump has left the door open for tariff renegotiation, though the prospect of a prolonged trade negotiation could still dampen investor sentiment.

Singapore

• Singapore has only been subjected to the baseline 10% tariff—possibly due to its consistent trade deficit with the US.

• However, Singaporean equities may outperform their regional peers in the near term due to relatively smaller US tariffs, widening equity market breadth, resilient corporate earnings, and improving investor sentiment, supported by MAS-led initiatives to revitalise the local stock market.