Here's Why a Donald Trump Victory Could Be Very Bad News for Asia

If Republican presidential candidate Donald Trump wins on Tuesday, that could be very bad news for Asia.

He and Democratic presidential candidate Hillary Clinton are about tied, according to the latest polls, meaning that Trump has a very real chance of winning.

And that could be very bad news for Asia.

Although it is true that Asia might suffer if Clinton is elected, it would be worse if Trump wins.

Until recently, it seemed that she was a shoo-in to win the election, and the odds are still leaning in her favor. But the latest round of email revelations have taken the wind out of her campaign's sails.

One way to forecast election results are prediction markets, like the Iowa Electronic Markets. Since 1988, it has allowed people to place small-scale bets on U.S. election outcomes, and it has done very well at forecasting election results.

One of the markets that it has developed is the winner-take-all market. This takes bets on which political party will win the largest percentage of the U.S. popular vote during the presidential election.

Of course, the popular vote doesn't decide who wins the election. It depends more on the outcome for each state, but it does give an idea of the way voters are leaning.

In August, an individual could have bought a Democrat (Clinton) share in the winner-take-all market for 77 cents and would have gotten $1 back if she won the largest percentage of the popular vote.

At the same time, a Republican (Trump) share was going for 25 cents. That meant that if he won the popular vote, the bettor would get $1 back.

But recently, the momentum in the winner-take-all market has shifted to Trump and the Republicans.

Republican odds have improved dramatically over the past week. Republican share prices have jumped to 40 cents, showing that their odds of winning are much higher, but the cost of a Democrat share has fallen to 62 cents, reflecting the party's diminishing odds of winning the election.

If Trump becomes president and follows through on all his promises it would hurt Asia.

He equates American "economic independence" with canceling long-standing trade agreements and has said that the North American Free Trade Agreement is "the worst trade deal in the history of the country."

Trade has also said that the Trans-Pacific Partnership, which includes many Asian countries, is a "terrible deal" for America.

He has boasted that if he becomes president he will cancel the pending trade deal.

Changing or ending any large trade deal would be a bad omen for globalization, and globalization has been key to Asia's recent economic growth. The continent's emerging economies have enjoyed major economic benefits feeding Americans addiction to buying things.

Asian factories will only be able to continue supplying cheap goods to American consumers if the U.S. allows it.

The relationship will fall apart if the U.S. imposes higher tariffs on goods imported from Asia. It would also mean production would eventually move to other countries or to the U.S.

Either outcome would be bad for Asia.

In July Trump said, "We can't continue to allow China to rape our country."

He has threatened to officially name China a currency manipulator if he wins the election.

A currency manipulator is a country that tries to make its exports cheaper and more competitive by weakening its currency.

Having this designation means that the U.S. could charge extra duties on "artificially cheap" Chinese products. It could result in a trade war between the planet's two largest economies.

That would result in more tariffs and quotas on each country's imports and exports, which would slow trade and affect economies outside China and the U.S.

And even though China isn't part of the TPP, Trump has contended that it will join the TPP through "the back door."

He is partly right about this, as China has made deals with many TPP members that would allow if to benefit from the deal.

Trump also wants to see China-U.S. trade "reform."

He views the trade relationship as fundamentally out of balance and would like to tilt it back in the U.S.' favor.

Trump says that China, aside from manipulating its currency, is also breaking international trade rules, stealing commercial secrets to gain an advantage and taking American jobs.

If he actually did any of the things that he said he would do, it would have a big impact on manufacturing in China, and that would affect the country's entire economy. Because China is the driver of Asian economic growth, it would also affect the economies of every country in the region, especially economies such as trade-dependent Hong Kong and Singapore.

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This is only part of what a Trump presidency would mean for Asia. We've prepared a free report full of more details about how a President Trump would affect Asia - and how you can prepare your portfolio for it. You can download your free copy of the report by clicking here.

This article is commentary by an independent contributor.

Kim Iskyan is the founder of Truewealth Publishing, an independent investment research company based in Singapore. Click here to sign up to receive the Truewealth Asian Investment Daily in your inbox every day, for free.

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