These 8 Asian countries will get the biggest boost if the trade war forces US companies to leave China

Reuters

• The trade war between the US and China has created some opportunities for other Asian countries, says Rashmi Gupta of JPMorgan Chase.
• To avoid tariffs, companies may shift manufacturing from China to other countries in the region such as Vietnam.
• While emerging markets have lagged their developed-market peers for years, there are still pockets of opportunity for returns.
• Read more on Markets Insider.

In every trade war, there are winners and losers. While the US and China might be losing as ever-escalating tensions between the countries push tariffs higher, there are other countries in Asia that could be winners.

As it stands right now, US companies manufacture products in China, or use products from China in their global supply chains. But in order to avoid tariffs on Chinese products, companies could shift manufacturing away from China in favor of other Asian countries, Rashmi Gupta, a money manager at JPMorgan Chase Bank, told Markets Insider in an interview.

In a June report, a group of economists at Nomura ranked which countries would benefit most from the US and China diverting imports away from each other and into other countries. This can be positive and "benefit some industries in those economies," they wrote.

The products that are being diverted most are electronics, followed by furniture and travel goods, Nomura said.

Moving imports from China has already been floated as any option by President Donald Trump. On Friday, he demanded in a tweet that American companies "immediately start looking for an alternative" to doing business with China.

In the same tweet, Trump increased tariffs already in place on $250 billion of imports to 30% from 25%, starting October 1. He also said that the final $300 billion of imports set to begin tariffs on September 1 would be taxed at 15% instead of 10%. The escalation came after China imposed retaliatory tariffs on $75 billion of US imports.

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To be sure, ancillary emerging-market countries have already been hit hard by the trade war this year. The MSCI EM Index is flat in 2019 so far, while the S&P 500 has climbed more than 14%. And that underperformance stretches back years.

But Gupta says there are still ample pockets of opportunity within emerging markets.

"We talk about emerging markets as one bock, one asset class, but you have to remember there are many different countries," she said.

Those countries have different policy regimes and drivers of growth to consider, which can make emerging-markets a rich ground for generating returns, said Gupta.

These are the top Asian countries that stand to benefit from the escalating trade tensions between the US and China, according to Nomura analysis. They're ranked below in increasing order of potential GDP gains.