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Original Title: US Elections Closer to These Two Asian Markets or Will They Turn into Potential Winners and Losers
Currently, less than two months before the US presidential election, Asian investors are weighing the potential impact of the US election on the Asian market.
In view of the fact that the benchmark stock indices of India and Japan are still in decline this year, lagging behind the 1.9% increase in the MSCI Asia Pacific index, the markets of India and Japan have recently become the top analysts’ focus.According to the polling agency FiveThirtyEight’s general election prediction model on September 17, Democratic candidate Joe Biden has a 75.7% chance of winning.
Goldman Sachs noted that in Japan, the performance of the benchmark Topix index tends to weaken during the US general election.This mainly reflects the increase in uncertainty and the yen tends to depreciate after the elections.
“The victory of Trump or the Republicans who maintain control of the Senate will reduce political uncertainty, while the victory of Biden and the control of the Democrats of both houses of Congress may mean an increase in corporate tax rates or other new policies. “. Goldman Sachs strategist Kazunori Tatebe wrote in a report on September 18.
Another important factor to consider is the impact of the new coronavirus.
“In this presidential election, the new corona virus may mean that it will take longer than ever to determine the bottom line, which may mean that the Japanese stock market will face longer-lasting uncertainties and headwinds,” the Goldman strategists wrote. Sachs. “If Biden is more likely to win, given the expected political uncertainty, investors in the Japanese stock market can reduce their exposure to stocks that have a relatively high share of sales in the United States.
These strategists also pointed out that these Japanese companies will be adversely affected by tax increases and may also be affected by changes in healthcare, commerce, and other regulatory areas.
On the contrary, UBS stated that regardless of the outcome, the Indian market is considered one of the biggest beneficiaries of the US elections.
UBS analyzed the potential impact of the US elections in the 12 largest markets in Asia and believed that India was the winner in three cases: Biden won the Democratic Party by sweeping the Senate and House of Representatives, and Biden won and led Congress . Trump has been re-elected to maintain the status quo. At the same time, UBS also considered factors such as trade and foreign policy, Fed policy, and fiscal spending on infrastructure.
UBS strategist Niall MacLeod said that if the Democratic Party wins, India will benefit from a potentially more favorable US trade policy, and even if Trump wins or a divided Congress led by Biden, the Indian market will benefit from the Fed. .
He wrote in a report on Sept. 17 that Indonesia and India have relatively high interest rates relative to US Treasuries. If US interest rates remain low for a long time and Global investors look for high-yield assets, then there may be more capital inflows.
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