Asian companies to ramp up investments in US amid supply-chain shifts

Asian companies set to step up US investments amid supply-chain shifts.

Ernesto Torres Cantu, Citi's head of international business outside North America, said companies across these Asian economies have significant capacity to invest in the US, suggesting that the trend of increased capital inflows is likely to persist.

Speaking to Reuters in Hong Kong, Cantu said inbound business into North America was recording double-digit growth, reflecting rising investment activity by global companies seeking to expand their presence in the US.

Citi and JPMorgan are among the banks financing Japanese projects linked to Tokyo's $550 billion investment commitment to the US. Meanwhile, the White House recently announced the initial phase of South Korea's $350 billion strategic investment package.

According to Cantu, investments in US-bound projects typically build over time as companies move through different stages of expansion, from acquiring land and constructing factories to setting up manufacturing operations and managing day-to-day activities. This gradual process is expected to sustain investment flows over an extended period.

He added that large multinational companies had demonstrated considerable resilience amid geopolitical disruptions and were adapting quickly to changing business conditions.

While tariffs remain an important consideration, Cantu said the Gulf War could be having a more significant impact on corporate decisions, prompting companies to reassess trade routes and restructure supply chains.

These developments are increasing the need for banking services such as payments, trade finance and transaction settlements as businesses navigate changing international trade environments.

Citi's services business, which provides cash management, payments, trade finance and liquidity solutions to corporations, financial institutions and governments, reported a 15% increase in revenue in the third quarter of this year. This compared with an 8% rise in the bank's overall revenue, highlighting the strength of its transaction banking operations.

Cantu also expects cross-border business flows involving Asian economies to expand further, with China and India emerging as key centres of activity.

Trade between Britain and India is growing significantly following tariff reductions. He also expects the European Union's free trade agreement with India, scheduled to take effect in 2027, to create substantial business opportunities.

Meanwhile, business expansion from China into international markets is expected to remain strong. Cross-border flows from China to the rest of the world have increased by more than 20% annually over the past two years.

In China, Citi plans to leverage its extensive corporate banking client base to expand its presence in the domestic securities market, serving both local and international companies.

The bank recently received approval to establish a wholly owned securities unit in the country. Cantu said this would allow Citi to pursue a larger share of China's onshore securities business by building on its existing relationships with corporate clients.