Summary by Bloomberg AI
- Southeast Asian stocks fell after US President Donald Trump announced tariff increases, with Vietnam’s main stock index closing 6.7% lower, its biggest one-day decline since 2001.
- The tariffs will have a significant impact on Southeast Asian economies, which are highly susceptible to US tariffs, with America being a top trading partner for many countries in the region.
- The cost to insure Southeast Asian countries’ sovereign debt also climbed, with credit-default swaps tracking emerging Asia bonds widening by the most in 19 months, as investors grew concerned about the impact of tariffs on debt repayment.
By Marcus Wong, Eduard Gismatullin and Nguyen Kieu Giang
04/03/2025
(Bloomberg) — Southeast Asian stocks fell after Asian emerging nations were given some of the biggest tariff increases by US President Donald Trump. Vietnamese shares slid the most in more than two decades.
Vietnam’s main stock index closed 6.7% lower, the biggest one-day decline since September 2001, with about 70% of shares on the Ho Chi Minh Stock Exchange falling by the 7% daily limit. Equities in Thailand, the Philippines, Malaysia and Singapore also declined. Currencies were mixed with the Thai baht and Vietnamese dong weakening, while the Philippine peso gained.
The turmoil came after Southeast Asia was hit particularly hard by the reciprocal tariffs announced by Trump on Wednesday. The president said the US would place a 46% tariff on Vietnam’s exports, 36% on Thailand’s, and 32% on Indonesia’s. The region’s largest trading partner — China — was heavily targeted, with Beijing now facing a cumulative 54% tariff.
“Asian economies will face significant headwinds in next few months due to the direct impact of sharp spikes in the US tariff rates on their exports as well as the indirect impact of the shock to global growth,” said Homin Lee, a senior macro strategist at Lombard Odier Ltd. in Singapore. “Whether or not the governments in the region can lower the tariff rates meaningfully through their bilateral negotiations with the Trump team remains to be seen.”
Southeast Asian economies are highly susceptible to US tariffs, with America among the top two main trading partners for Singapore, Vietnam, Thailand and the Philippines, according to International Monetary Fund data published in 2023. The region’s equities were already among the worst performers in the world this year.
Vietnam, which employed a charm offensive toward the Trump administration ahead of the announcement, failed to avert one of the largest tariffs announced by the White House. The country is among the world’s most trade dependent nations, with exports equivalent to nearly 90% of economic output. It has the third largest trade surplus with the US, making it a prime target for tariffs.
‘It’s not surprising to see panic selling as local investors only expected 10%-to-15% tariffs,” said Nguyen Anh Duc, head of institutional brokerage and investment advisory at SBB Securities Corp. “Most stocks are trading at limit down in price with a huge overhang of selling volume. That drove the index down to almost its limit down level of minus 7%.”
Bank for Investment & Development of Vietnam and Bank for Foreign Trade of Vietnam were the biggest drags on the country’s benchmark stock index as both plunged by the daily 7% limit.
Singapore stocks trimmed earlier losses as the country was only hit with a relatively light levy of 10%. Singapore’s dollar and the Philippine peso both strengthened, helped by broad weakness in the US currency. Indonesia’s financial markets are shut through April 7 for holidays.
“For Singapore, the application of minimum 10% tariff rate is a bit of silver lining, but the negative shock will still be substantial as the city state’s goods trade is much larger than its economy,” Lombard Odier’s Lee said.
The cost to insure Southeast Asian countries’ sovereign debt also climbed. Credit-default swaps tracking emerging Asia bonds widened by the most in 19 months, according to traders. The costs have jumped since February as investors grew more concerned about the impact of tariffs on the ability of borrowers in the region to repay their debt. Indonesia’s five-year contracts climbed to the highest since October 2023.
Markets are now waiting for any possible retaliatory response from tariff recipients, further adding to global trade tensions. China on Thursday said it firmly opposes the US tariff move and vowed to take countermeasures to safeguard its own interests.
A further uptick in trade tensions may heap additional pressure on Asian currencies. The Indonesian rupiah has slumped 2.8% this year and last month fell to the weakest level since the Asian financial crisis in 1998.
Although the tariffs “will have an overall negative impact on foreign direct investments into the Asean region, it is important to highlight that each country has different economic drivers and investor bases,” said Gary Tan, a portfolio manager at Allspring Global Investments in Singapore.