While the pandemic drove a temporary surge in shipment volumes due to demand for some products such as personal protective equipment (PPE) and electronics, it remains to be seen whether global trade will recover on a sustained basis. There is increasing risk of bifurcation in crucial technologies, as the US and China seek to reduce their reliance on each other. As the two countries diversify their respective technology bases and supply chains, the development of important technologies such as semiconductors, artificial intelligence and 5G telecommunications will increasingly bifurcate. Recently, the US introduced restrictions on the export to China of advanced processors widely used for AI calculations. Cross-border mergers and acquisitions across technology firms have been blocked by both sides due to anti-monopoly and national security considerations. US-China tensions are also causing a rift between the two rivals’ financial systems. Increasing scrutiny of Chinese listings in the US has prompted some Chinese firms to think about delisting from US markets. China, as well as some other countries, are seeking to reduce their dependence on the US dollar and US payment system. These developments could lead to a more fragmented global financial system over time. The growing decoupling between the US and China in trade, technology, and finance are likely to have far-reaching economic consequences. At the broad macro level, this decoupling cannot be good for global economic growth. At the micro level, there will be adjustments in supply chains, trading relationships, technology procurements, and financial arrangements that will have differentiated implications across countries and sectors.

[3]  South and Southeast Asia are among the most dynamic economic regions in the world. Growth in these two regions is driven by favourable demographics, rising affluence, young tech-savvy consumers, and rapid urbanisation. ASEAN is likely to benefit from supply chain diversifications and an outward shift of labour-intensive manufacturing from China. South and Southeast Asia have booming tech sectors that present opportunities for PE/VC investments. The pandemic has accelerated digitalisation in Southeast Asia as retail transactions and communications migrated online to overcome COVID-19 restrictions. According to industry estimates, 3 out of 4 persons in ASEAN are now online. [4] Higher digital adoption in ASEAN has helped spur a vibrant technology sector. There is a burst of entrepreneurial energy in ASEAN and the region is home to many innovative high growth companies. The number of unicorns in ASEAN has continued to increase over the last few years. ASEAN’s early wave of tech giants like Grab, GoTo and Sea have made public exits. As other promising start-ups in the region scale up and expand their footprint, they will need to raise capital and seek PE/VC funding. Private credit will be a key driver of growth in private markets. There are opportunities for private credit to play a larger role in Asian enterprise financing just like its private equity counterpart. Private credit is generally structured in the form of floating rate exposures. Hence, investors benefit from larger coupons as interest rates rise.