Trump’s business savvy has DBS chief upbeat about the future
SINGAPORE — In contrast to the sombre outlook last year after Mr Donald Trump won the presidential election, DBS Group’s chief executive Piyush Gupta yesterday painted an upbeat assessment of the global economy for this year while playing down concerns over potential United States protectionism.
Speaking at a luncheon for DBS Private Bank clients yesterday, Mr Gupta said Mr Trump “will do less damage than most people think”, and that his business-friendly policies and the pro-business Cabinet he has assembled will keep growth momentum in the US going.
“I think he’s innately such a strong businessman that his business instincts will come to the fore. This is further exemplified by the Cabinet he has … Everybody has a deep business background, people who run large companies … At its heart, these people have a big business agenda so I think he will do less damage than most people think,” Mr Gupta said in his address.
He added that Mr Trump is also inheriting a US that has been on a firmer footing, with various economic indicators including those on consumption, employment, manufacturing and housing registering stronger figures in recent months. A stronger US is good news for Asia in the longer term even though the region may experience capital outflow in the initial few months, Mr Gupta said.
On concerns of the US turning more protectionist, the head of South-east Asia’s largest lender acknowledged that although such a stance is indeed a threat to global trade and growth, he doubted that the Trump administration would practice total trade protectionism.
Mr Trump and his Cabinet could decide to “make a lot of noise about people taking jobs from America, shut some plants in Mexico or apply anti-dumping duty on China,” said Mr Gupta. “(But) Trump is a master of doing a few small things and making (them) into (something) big. If that’s all they do, I don’t think you’ll see that much trade protectionism,” said Mr Gupta.
At a separate event yesterday, Mr Anthony Raza, UOB Asset Management’s head of multi-asset strategy, also expressed optimism that the global economy could pick up this year.
He added that the growth momentum may lead to reflation, which is the return of inflation to normal target levels. This implies that wages may begin to rise with increasing consumption. Against such a backdrop, Mr Raza said global equities may perform better.
“Economic growth and normalising inflation rates bode well for investments in growth assets, such as equities, as they imply that consumer prices are rising in tandem with wages and revenues.
“For 2017, we expect equities to provide high single-digit returns. In comparison, while returns from fixed income will remain positive due to the gradual increases in interest rates, they will likely be at low single-digit levels given the corresponding rising yields,” he said at the fund house’s 2017 Investment Outlook Seminar.
However, he warned that risks within several major economies may hamper growth prospects. These uncertainties include Brexit and the political environment in Europe, as well as a potential hard landing in China.