ESR, CDPQ, Emergent, Yardi Take Temperature of Trade War

Investors and developers building industrial and infrastructure portfolios in Asia are confident in the long-term prospects for their sectors despite recent disruptions to trade and supply chains, according to experts on a panel at the Mingtiandi Singapore Forum on Tuesday. Watch the full recording>>

The discussion covered potential tariff impacts with speakers from Hong Kong-listed industrial specialist ESR, Canadian pension manager CDPQ, Singapore-based logistics platform Emergent and the event’s sponsor, real estate software provider Yardi.

ESR, whose fund management and development platform extends across Asia Pacific and Europe, has yet to see a material impact from the tit-for-tat tariffs imposed by the US and China, according to the group’s infrastructure head Payam Eshragi, with customers and investors taking a wait-and-see approach to the standoff. After US and Chinese negotiators reached a deal on de-escalation Monday, stakeholders are looking ahead to the outcome of the Trump administration’s 90-day pause on reciprocal tariffs affecting a long list of trade partners.

“I think now with the easing yesterday and that being paused for a 90-day period, you’re probably going to see a little bit of the dropping of shoulders and a bit relaxed by everyone, but ultimately probably another wait-and-see approach to determine what happens close to 90 days,” Eshragi told the audience of more than 250 executives in Singapore.

Rerouting to Continue

Josephine Yip, who leads CDPQ’s real estate investment strategies in APAC, portrayed the new tariff round as the latest chapter in a wider story of existing tensions centred on low-cost manufacturing. And while the exorbitant levels imposed on China have grabbed headlines, she noted that the tariff rates of 26 percent for India and well over 30 percent for other Asian economies would likewise have an impact on trade movements.

CDPQ’s Josephine Yip speaks at the Mingtiandi Singapore Forum

“So the rerouting, we believe will continue to happen,” Yip said. “For low-cost manufacturing and consumer electronics, it’s emerging markets in Southeast Asia, as well as India. For the more advanced manufacturing, it’s the more advanced economies: Singapore, Malaysia, Korea, Taiwan. But at the end of the day, we take a longer-term view to our investments across APAC.”

Emergent managing director Zak Ungerman detected a calming of the markets and a sense of optimism after “everyone kind of freaked out” over the initial tariff announcement in early April.

“We don’t think that China plus one is going away,” Ungerman said. “First of all, this isn’t the end of the volatility, but we think that investors can see through the volatility. And those who have a long-term conviction, they have the opportunity to perhaps get ahead of it and make some better deals now. Sellers are willing to negotiate a bit more than they were in the past.”

Emergent operates in Indonesia and Vietnam, two markets hit hard by the proposed reciprocal tariffs.

“Interestingly, we continue to see demand for manufacturing in those markets,” Ungerman said. “So I don’t think anyone believes that the supply chain will be completely reconfigured and that no one is going to use Vietnam as a hub for manufacturing.”

Bullish on Asia

Irrespective of trade wars, Yardi APAC head Bernie Devine said it’s clear that the middle-income market in North America is shrinking while Asia’s continues to grow.

“That’s creating less ships leaving Asia and going to the US but more ships staying on the coast of Asia,” Devine told the forum. “And I think a lot of people outside of Asia don’t really appreciate that.”

The result is that landlords and investors are focusing on opportunities in areas like last-mile logistics in emerging Asia instead of in developed markets, according to Devine.

“I think we’re very bullish on the Asian market and the fact that, the uncertainty we’re seeing at the moment, although it’s going to continue, I think what we’re seeing is that people are just accepting that that is the way it is, and that we’re going to carry on and deliver the returns we need to deliver even with that situation,” he said.