Trump's tech tariffs are awesome, for South-east Asia

DONALD Trump may well be the best thing that has happened to South-east Asia's humble electronics industry in quite a while. Relatively small, and frankly not as sexy as their North Asia cousins, makers of components and devices with factories dotted around the region may get some time in the spotlight thanks to the US administration's decision last month to levy an additional 25 per cent import tax on 818 separate items from China.

Assembly of name-brand gadgets such as Apple Inc's iPhones tends to grab an outsized share of attention from media, analysts and investors. Yet crucial parts of the electronics supply chain that also rely on low-cost manufacturing exist in South-east Asia, such as capacitors, printed circuit boards, hard drives and bluetooth headsets. Simon Shen, president of Taiwanese electronics conglomerate New Kinpo Group, oversees facilities in the Philippines, Malaysia, Singapore, Thailand and the US; and he is becoming quite a fan of the US president. Well, his tariffs anyway.

The more the US taxes Chinese electronics products, the better it is for Asian companies like his that have operations outside China, Mr Shen told Bloomberg News last week. Of course he is talking his own book when he says that clients are very keen to hear about non-China manufacturing, especially with a Philippine initial public offering (IPO) on the cards.

Some investors have already taken notice of the fact that Thailand, Malaysia, the Philippines and Vietnam stand as likely beneficiaries of the US-China trade war.

Thailand's electronics components sub-index is up 14.5 per cent in the past month against a 4.8 per cent rise for the broader market. Eight of its 29 members have climbed by double digits over that period, led by a 20 per cent advance for Delta Electronics Thailand Pcl. Stars Microelectronics Thailand Pcl has climbed 12 per cent.

Perhaps investors are willing to bet that 12 straight quarters of revenue declines at Stars might be brought to an end if customers lean more on South-east Asia. They are also betting on Mr Shen's Thai unit Cal-Comp Electronics Thailand Pcl as well as Hana Microelectronics Pcl.

Viettronics Binh Hoa JSC, a Ho Chi Minh City-based assembler of electronics and components, more than doubled in the past month compared to a 4.5 per cent decline in the benchmark Hanoi UPCoM index. The 28 members of Malaysia's information technology sector averaged an 8.4 per cent return compared with 4.6 per cent for the market.

The Philippines is an exception, with its information technology index falling 0.5 per cent versus a 5.4 per cent advance in the Philippine Stock Exchange All Share Index. Perhaps a listing for the local unit of Mr Shen's Cal-Comp Technology will help turn that around, aided by a protracted US-China tariff dispute. With Mr Trump repeatedly upping the ante, the US president is likely to remain an accidental ally. BLOOMBERG