Southeast Asia's Biggest Bank Downplays Impact of Trade War

(Bloomberg) -- DBS Group Holdings Ltd.’s chief executive officer said fears about the impact of the U.S.-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 on Tuesday. 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.

Read More: Southeast Asian Firms More Upbeat Than Most on Trade Outlook

Gupta said 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.

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Southeast Asia’s biggest bank is keen to seize business opportunities from China’s growing global footprint, Gupta said.

Most of DBS’s 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 internationalization of the yuan present opportunities, he said.

DBS has arranged equity capital funding and real estate investment trust transactions for Chinese companies outside their home market, Gupta said. The domestic Chinese REIT market could become bigger than the U.S.’s 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 percent share. “Your ability to be relevant to local companies tends to be somewhat limited,” he said.

The New Economy Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.

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