Obama Visits a Skeptical Asia to Talk Security, Trade

TAIPEI (TheStreet) -- U.S. President Barack Obama begins a six-day Asia trip Wednesday with an agenda focused on renewing political connections in a skeptical region, rather than on deals for American multinationals.

Security and trade dialogue against the backdrop of a rising China will dominate the president's visits to Japan, Malaysia, the Philippines and South Korea, analysts say.

Obama had scheduled visits to Malaysia and the Philippines in October but cancelled them as a budget impasse shut down U.S. government business. He wants to rekindle political ties that support a U.S. military alliance in Asia and keep China in check, analysts say.

He may announce a sprinkling of deals involving U.S.-based companies, but major ones are considered unlikely -- as is a strong market reaction in Asia or New York. By contrast, Boeing (BA), General Electric (GE) and Honeywell International (HON) announced deals with China in 2011 as Obama met his former Beijing counterpart Hu Jintao.

"The consensus seems to me that this visit is more political and security-focused rather than about economics," says Tim Condon, Asia head of financial markets research with ING Financial Markets in Singapore. "I think it would be a surprise if anything were announced that's capable of moving markets broadly."

The Asia visit reconfirms Obama's "pivot to Asia" strategy announced in 2011, though that resolve is also seen as weakening while the Middle East and Ukraine hold Washington's attention. The pivot means the United States supports its democratic East Asian allies economically and militarily as old U.S. Cold War rival China gains military and economic might.

China has also ruffled its Asian neighbors over pollution, river diversion and maritime claims.

The Philippines is looking to the United States for more military aid as it takes China to a United Nations tribunal over a disputed tract of ocean.

The U.S. is obligated by a 1951 mutual defense treaty to help the Philippines in case of an attack. China, the Philippines and four other governments claim all or part of the 3.5-million-square-kilometer South China Sea, which is valued for fisheries, shipping lanes and possible oil or gas reserves. Beijing and Manila were locked in a maritime standoff two years ago.

Malaysia is one of 12 nations talking to the United States about forming the Trans Pacific Partnership trade bloc, but was put off by Washington's stringent requirements. Japan is hesitating for the same reason. Obama's trip may lead to a breakthrough that gives Malaysia, a major palm oil exporter, more confidence in the partnership.

Obama would talk to South Korea about military threats from its isolated Communist neighbor North Korea, which the south says is stepping up activity at a major nuclear test site.

In Japan, Obama may indicate support for Tokyo's control of eight disputed islets in the East China Sea. Beijing claims them as well, which set off a series of risky military flyovers and naval expeditions since Tokyo nationalized the islands in September 2012.

American business may gain in the long term from the Obama trip, analysts say. Tighter political relations would open the doors further to American brands in counties where Chinese rivals, such as telecom developers Huawei (002502:Shenzhen) and ZTE (ZTCOF), have gained ground. 

"I suppose [Obama] is trying to catch up on what they've missed out, to plant the flag to say that this neck of the woods still matters to Americans," says Song Seng Wun, regional economist with CIMB Research in Singapore. Obama's visit, he says, may produce "the odd deal here and there to show that at least there is still opportunity for business despite gains that the Chinese have had around the world, especially here in Asia."

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

More from Emerging Markets

U.S. Considers New Tariffs on Imported Vehicles

U.S. Considers New Tariffs on Imported Vehicles

Video: Here's How Global Stocks Can Boost Your Portfolio

Video: Here's How Global Stocks Can Boost Your Portfolio

Wall Street Looks To Extends Gains After Goldman Earnings Beat, China Data

Wall Street Looks To Extends Gains After Goldman Earnings Beat, China Data

China's President Xi Jinping Tells Boao Forum He Supports Opening Markets

China's President Xi Jinping Tells Boao Forum He Supports Opening Markets

U.S. Stock Futures Steady; Asia Stocks Mostly Lower

U.S. Stock Futures Steady; Asia Stocks Mostly Lower