It’s a tribal world we live in

WITH the advancement of science and technology, our world should be more connected. Globalisation was the dominant trend for the past many decades, especially the post-Cold War era.

Multilateralism and cooperation between nations was flourishing for a long time. With developed countries and developing economies working together, humanity’s future looked optimistic.

The historical past of colonisation and wars has also been publicly accepted as having no place in today’s modern world.

Unfortunately, this time of peace, prosperity and cohesion had been taken for granted in the past decade. Divisive political figures started to get elected to power in their respective countries. Instead of working in unison, nationalistic sentiments were stoked while protectionist policies started to become cornerstone economic agenda for those running for office.

No doubt, such a populist approach is an easy sell to naïve voters who help elevate divisive figures into leadership roles.

However, why would a global society that has once campaigned hand in hand against wars and sung songs to celebrate peace start to take a turn for the worse?

A series of political movements started changing the landscape significantly, when notable events in 2016 such as the Brexit referendum (which eventually got Boris Johnson into power) and Donald Trump winning the election to become the president of United States took place.

A series of divisive policies started to be rolled out, including the likes of “Muslim Ban”, trade war against China and economic sanctions (usually reserved against totalitarian regimes) being weaponised against competing nations.

In May 2022, during Berkshire Hathaway’s AGM, Warren Buffett shared his usual nuggets of wisdom, one of which is highly relevant to this topic of discussion today. In his observation, people in general have become somewhat more tribal than they have for a long time.

The last time he recalled that people were that tribal was in the 1930s when Franklin D Roosevelt was the president of the United States. He further said, “I don’t think it’s a good development for society when people get tribal.”

Personally, I fully agree with Buffett’s observation. It is not only the United States that is becoming tribal, but we are also seeing such patterns of behaviour everywhere.

The distrust among nations or blocs has led to irrational trade wars, sanctions and tariffs being imposed on one another, erecting invisible walls that impede free trade as well as economic progress.

It would appear that things have taken a turn for the worse.

For instance, incumbent US president Biden, who is facing an election against Donald Trump in November, has unveiled a series of tariffs targeting China.

His administration, after having reviewed the tariff rates over the past year, is keeping intact the tariffs on more than US$300bil (RM1.4 trillion) worth of China goods as imposed by his predecessor. This round of new tariffs target several key industries.

Collectively, this targets US$84bil in annual imports from China to the United States currently. The reasoning put forth by Biden for this action is because China is not competing fairly, and it is heavily subsiding these industries, which in turn, provides unfair trade advantage to the detriment of US industries.

This, to me, is by far probably one of the most ludicrous excuses ever used by US policymakers to justify their actions.

On many levels, US and European carmakers have benefitted tremendously from China’s economy for the longest time, as they have been exporting their products to the populous nation.

Buick, a brand under the US automaker General Motors (GM), was one of the most popular cars in China for the masses.

At its peak, GM had close to 15% of China’s automotive market share, making great profits. The company’s fortune started to turn only when China’s domestic automotive sector started to pick up, especially in the electric vehicle (EV) space.

When everything is in one’s favour, all is fair game. When things start to become challenging, others are accused of cheating. This is uncalled for.

Those who are singing and painting the same narrative are willfully oblivious or simply biased. We have all seen the quality of China’s EV in terms of design, function and even affordability.

It is not the case of dumping inferior products at discount pricing. At its core, it is delivering premium products for the benefit of the common people, while pushing forward the green agenda; the same way Elon Musk has been doing with Tesla through the years.

Locally, our rakyat have been victims of a protectionist policy in the automotive sector for decades due to the need to shelter Proton.

The damage done is the lack of disposable income where households have to spend a bulk of their income serving long-tenured car loans at a high cost due to the lack of quality affordable cars.

This money would have been better used for other consumption activities, boosting the healthy of the country’s economy.

Despite much protection, Proton had in the past reportedly suffered losses to the tune of RM20,000 per vehicle produced. The net loss ballooned to RM481mil during the financial year ended March 2019.

Today, we have seen how Zhejiang Geely Holding Group turned around the fate of Proton. While there was resistance at the beginning, Geely’s technology, management and quality control helped Proton become a trusted and reliable automotive player in the country, selling 150,000 units last year.

There is no denying that competition may be uncomfortable, but discomfort is what drives innovation and progress.

The stock market has done very well since the start of the year. The FBM KLCI is back to above 1,600 points – a level unseen in two years.

In the span of almost one year, the FBM KLCI had rebounded close to 200 points from July 2023 lows of 1,400. Our team is a strong believer in the local bourse.

For the longest time, we have gone on media publicly to emphasise that our local stock market is undervalued compared to regional peers and is due for a rebound.

What we are seeing today is not surprising considering that Malaysia is rebounding from its low and playing catch up now. The worst is indeed over.

That said, we have also discussed the potential risks to the capital markets and economy. The US presidential elections will be a major event to take note of and we should adopt a cautionary approach for the second half of 2024.

All eyes will be on the development. Locally, it is important for our policymakers to focus on the nation’s economy and avoid getting into racial rhetoric and preaching divisive policies just to placate right-wing extremist demands.

The best way for the country and the global economy to move forward is when the path of moderation is adopted by the public and private sectors. Only then, can we usher in the era of peace and prosperity once again.

Ng Zhu Hann is the chief executive officer of Tradeview Capital. He is also a lawyer and the author of “Once Upon A Time In Bursa”. The views expressed here are the writer’s own.