Vietnamese shares tumbled.
Vietnam’s main stock index slid as much as 5.4%, the biggest loss in almost three years, while equities in the Philippines, Malaysia and Singapore also fell.
The Thai baht weakened as much as 0.8% against the dollar, while the Vietnamese Dong, Malaysian ringgit and South Korean won all dropped.
Southeast Asia was hit particularly hard by the reciprocal tariffs announced by Trump yesterday.
The US will increase levies on Vietnam’s exports by 46%, Thailand’s by 36% and Indonesia’s by 32%.
The region’s largest trading partner – China – was heavily targeted, with Beijing now facing a cumulative 54% tariff.
“The worst-hit region by this tariff announcement is undoubtedly Asian EM,” ING Bank analysts Padhraic Garvey and Francesco Pesole wrote in a client note. Global risk-off should be a common theme, and this should be accompanied by lower market rates, they said.
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 are already among the worst performers in the world this year.
Vietnam, which employed a charm offensive toward the Trump administration by cutting levies on imports and vowing to buy more US products, 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.
Broad selloff
In Vietnam, “I don’t think investors, foreign or local alike, were pricing in a hefty 30 plus percent tariffs,” said Kok Hoong Wong, head of institutional equities sales trading at Maybank Securities in Singapore. There’s a broad selloff across financials, manufacturing, property and some other makers, he said.
The cost to insure the nation’s sovereign debt also climbed.
Credit default swaps tracking emerging Asia bonds widened by the most in 19 months today, 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.
Investors are now waiting for any possible retaliatory response from tariff recipients, which may further escalate global trade tensions.
China said today that it firmly opposes the US tariff move and vowed to take countermeasures to safeguard its own interests.
A further escalation in trade tensions may heap further pressure on Asian currencies.
The Indonesian rupiah in March fell to the weakest level since the Asian financial crisis in 1998, while the Korean won is only around 1% away from the lowest since 2009.
The higher US tariffs are a “near-term negative for Asean, especially for markets exposed to trade and manufacturing flows,” said Mohit Mirpuri, a fund manager at SGMC Capital Pte in Singapore.