HONG KONG: Investments by some companies from Asian economies in the United States are set to keep climbing amid a global supply-chain shake-up, Citi’s international chief says, with spending expected to build in stages.
“These companies have a lot of capacity to invest. I think that investments from the South Koreans, Taiwanese, and Japanese firms is likely to continue,” said Ernesto Torres Cantu, who heads Citi’s global business outside of North America, across more than 180 countries and jurisdictions.
There is a lot of investment from global companies into the United States, with “double-digit growth in the inbound business into North America”, Cantu told Reuters in Hong Kong. Citi and JPMorgan are financing Japanese projects tied to Tokyo’s US$550bil US investment pledge, while the White House recently unveiled the initial tranche of Seoul’s US$350bil strategic package.
Investments in United States-bound projects tend to compound over time, Cantu said, comparing a company’s capital expenditure to a multi-stage manufacturing ramp-up, from buying land to building a factory and running daily operations.
“So, it just keeps going up.”
Large multinationals are showing resiliency amid geopolitical shocks, and are “adjusting exceptionally fast”, Cantu said.
While tariffs remain a factor, he said the Gulf War may be having a bigger impact, which is forcing many companies to rework their trade flows and supply chains.
That requires the bank to keep executing payments, trade finance and transaction settlements for clients across changing market environments, he noted.
While Citi’s overall revenue rose by 8% in the third quarter of this year, its services business, which provides cash management, payments, trade finance as well as liquidity to corporations, financial institutions, and governments outperformed with a 15% increase in revenue. — Reuters
