Madras mission, City in India

Chennai, Jan 18 The absence of the US and India from the Asia Pacific (APAC) region's major trade agreements is likely to limit their ability to reap economic benefits while China will increase its role as the regional focus for trade, said Moody's Investors Service in a report."While APAC trade has flourished under the auspices of a rules-based international order, the inception of major regional trade agreements and the absence of the US and India from these accords will increase China's centrality to regional trade," Moody's said.The global credit rating agency in a report said, the rising geopolitical tensions in APAC against the backdrop of increased competition between China and the US and its allies in the region will create "fault lines" that could carry long-lasting credit effects.Increased US-China polarization and military competition, exemplified by tensions in the Taiwan Strait and increased military expenditure by governments in the region, have reactivated new and existing security alliances that may drive shifts in international business strategies over time.These fault lines, which reflect the formation of new security and political pacts and the reconfiguration of Asia's established economic, trade and financial relationships, may put pressure on international companies, investors and financial institutions to reshape or build redundancy into their operations.These risks come on top of existing credit challenges such as weaker global growth and tightened liquidity, Moody's said.According to Moody's, alliances and initiatives will likely ebb and flow with changes in governments and considerations of economic relations with China, but the overall direction is clear: governments including the US, Australia, India, Japan and others in Europe seek to form a security and economic counterweight to China.It also said semiconductors and renewable energy technology will face increased government curbs on access to sensitive technologies. Closer scrutiny of foreign investments and data localization efforts could become prevalent, raising regulatory and operational costs for multinational companies.Geopolitical alignments are also leading to an increase in defence expenditure for governments across the region including China, India, Taiwan and most notably Japan, Moody's said.Through its participation in the Quad, India has more overtly shifted its security posture though it retains elements of its historically "nonaligned" foreign policy, which has preserved space for it to maintain positive relations with Russia despite the latter's war with Ukraine, the report notes.Central banks in APAC have also proposed financial and transaction data localization for foreign financial institutions operating within their borders to support bank supervision and macro-prudential surveillance.In India, for example, both the central bank and capital markets regulator have either finalised or proposed data localization requirements that affect banks, payment providers, foreign investors and asset managers.Further capital and banking flows will align with geopolitical norms, said Moody's."The US dollar remains central to international trade, particularly in APAC, thus driving efforts to diversify into other currencies. Meanwhile, geopolitical considerations may alter strategies for globally active financial institutions with significant regional operations," the report notes.Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

Madras MissionFOLLOW

Madras mission, Latest News

A day after the Election Commission announced by-elections to the Erode East constituency in Tamil Nadu, the state Congress ... ...

Today, Bosch Power Tools India, a leading supplier of power tools for the construction, woodworking, and metalworking industry, introduced the GWS 800 Professional, adding to its robust line of angle grinders. Additionally, with this launch, the loca ...

Pristyn Care, the leading healthcare service provider has completed over 5 lakh+ patient interactions in South India. The leading markets include major tier 1 and tier 2 cities in South India, namely Bengaluru, Chennai, Hyderabad, Kochi, Madurai, Coi ...

Chennai, Jan 19 The US has become India's largest export market for gold jewellery ahead of the UAE, ... ...

Chennai, Jan 19 Passenger car major Maruti Suzuki India Ltd has begun exports of its new sport utility ... ...

With two back-to-back victories, DK Pharma, Mumbai would have stepped closer to the fina but Tamil Nadu Police, ... ...

Chennai, Jan 18 The increasing geopolitical pressure will have limited immediate effect on semiconductor supply chains but in ... ...

Chennai, Jan 18 The absence of the US and India from the Asia Pacific (APAC) region's major trade ... ...