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In 2016, before that day, most of the media and public opinion polls in the United States handed over to the candidate Hillary Clinton for the US Democratic presidential election. The results of the US presidential election, which I took for granted as if the sun rose in the morning, were overturned overnight. Thus, the 45th presidential election in the United States ended with the victory of Donald Trump. Candidate Hillary garnered more domestic votes and ended up lagging behind in the safety of the electoral body.
And four years later, the day of the US presidential election was brilliant again. This time, it was a confrontation with candidate Joe Biden. The poll clock again pointed to candidate Biden. And the final winner has not been confirmed on the third day as a result of the count. Various issues such as election manipulation and dissent in the presidential elections came up alternately, and investors around the world were also confused about the results of the US presidential elections, which could not get to either side. How the hell would it be?
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Let’s go back to 2016. When Trump was elected president, a warm wind blew across the US and Japanese equity markets. China was unsuccessful, but it was bad news for the Korean market. Contrary to the market’s prediction that the global stock market will be affected when Trump is elected, the ‘Trump Rally’ began right after the election. This is because Trump raised market expectations by promising to invest in infrastructure (infrastructure) worth $ 1 trillion, cut corporate taxes and relax financial regulations. In fact, after Trump’s election, the Dow Jones Index continued to climb to its highest level for four consecutive business days. This is the result of the drop in investor sentiment due to pre-election uncertainty, which was temporarily resolved with the election of Trump.
This momentum continued until the end of the year. At the time, the US stock market was recovering to an all-time high. Technology and materials stocks remained strong, lifting the NASDAQ market. In fact, on December 27, 2016 (local time), the NASDAQ index closed at 5,487.44, 24.75 (0.45%) more than the previous day, registering a record. The Dow Jones Industrial Average also closed at 19,945.04, an increase of 11.23 (0.06%) from the previous trading day. The Nasdaq figure was a record 5483.94 on Dec. 20, and then the new high. In the end, most business sectors rose, led by tech and materials stocks, and a Merry Christmas. Economic indicators also continued to perform well until the end of the year, stimulating investor sentiment. According to the S&P Core Logic Case-Siller, the US House Price Index in October rose 0.2% from the previous month and 5.6% from the previous year. The December consumer confidence index announced by the conference board also rose 4.3 points from the previous month to 113.7.
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This is the result of strong economic stimulus measures such as deregulation and policies to expand fiscal spending, as President Trump has attacked. Ecommerce and bio companies such as Amazon and Biogen are assessed as securing momentum at this time. Warren Buffett, the CEO of Berkshire Hathaway, the ‘investment geek’, bought large stocks worth $ 12 billion in about four months after the election of President Donald Trump and bet on the stimulus. International oil prices, which are currently struggling, were also strong at the time. International oil prices also rose at the end of the year in anticipation of the effect of production cuts in the main oil-producing countries at the time. On the New York Stock Exchange, the West Texas crude oil (WTI) price for February closed at $ 53.90, an increase of 88 cents (1.7%) per barrel from the previous trading day.
Stock markets in the main countries directly and indirectly affected by the United States were mixed.
The Nikkei index fell 5.36% on the 9th, shortly after winning the election, to 16251.54, and after a sharp drop, it escaped the shock and continued a bullish rally. They smiled as they benefited from the anticipation of US economic growth and the economic effects of the weak yen.
Contrary to concerns, on the other hand, the Chinese drama stock market was not immediately hit by a storm after Trump was elected. The Shanghai Composite Index rose 1.3% and 1.9% for a week after Brexit and Trump, respectively, showing no significant differences. Despite President Trump’s proclamation of regulation on China, the domino effect was not achieved immediately after the elections.
The post-storm storm hit the Korean market a bit. On the 9th, when Trump’s election was confirmed, the KOSPI ended at the 1940 line, which fell more than 3%. The KOSDAQ index also floundered heavily as the intraday 600 line collapsed. The structure was similar to the situation where equity prices were unavoidable in most emerging market countries. In particular, it is an analysis that a large amount of financial assets, which awaited the election of Hillary, were lost and the aftermath of the office of protection professed by President Trump was delivered. After Trump’s election, funds from emerging economies equity funds flowed rapidly from emerging economies to advanced economies and suffered difficulties. According to Daishin Securities at that time in 2016, between November 10 and 16, immediately after Trump’s election, the amount of the fund established was $ 5.44 billion in emerging markets. On the other hand, a whopping $ 39.3 billion was pushed into developed markets, making preparations sharp.
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So what will happen when Joe Biden’s presidential election is confirmed? First, experts say the risk of uncertainty is reflected to some extent due to the learning effect of the 2016 presidential elections. Moon Nam-jung, head of Daishin Securities’ long-term strategic research department, said: “Before After the US presidential elections, the US stock market was in a consolidation phase and the risk of uncertainty was finally resolved. “We believe there may be fewer aftermath of economic storms.” This means that even if the current presidential elections In the fog they drag on as expected up to a point or an objection occurs, the impact on the economy will be relatively small. Of course, the direction of economic policy and beneficiaries of certain sectors will be determined based on whether they are elected or no, but the opinion of many experts is that it is not decisive enough to shake the economy in general .
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Indeed, the US stock market is encouraging as the choice of candidate Biden becomes influential. On the 5th (local time), the Dow Jones Industrial Average closed the market at 22.8390.18, 542.52 points (1.95%) more than the previous day. The Standard & Poor’s (S&P) 500 Index also rose 67.01 points (1.95%) to 3,510.45, showing an increase of 2%. In particular, tech industry-related stocks like Apple, Amazon, Microsoft (MS), Facebook, and Netflix are running at more than 2% at the same time, and concerns about tech stocks are being resolved as well.
Another point to consider is whether the value of the dollar continues to weaken. Candidate Biden announced a plan to increase tax expenditures, and if the continued quantitative easing stance continues, the depreciation of the dollar is inevitable. Additionally, how to stop the corona 19 virus pandemic, which is again in epidemic in the United States, is expected to be a variable. That’s why Biden’s observations that economic stimulus can be stopped only when income and employment pick up before Corona 19 are also attracting attention.
Bioindustry, which is attracting attention as a biden-related sector, is also attracting attention. Biden said: “In exactly 77 days, the Biden administration will rejoin the Paris Climate Agreement,” citing environmental policy as the top priority of anti-Trump policy. Candidate Biden plans to invest $ 2 trillion in the clean and green energy industry by 2035. He is also preparing for active support and tax benefits for the energy and bio industries, such as the expansion of new and renewable energy and the promoting decarbonization of energy. “Green policy is one of the top priority strategies in the Democratic Party government,” said Kim Jeong-hyun, head of the ETF team at Samsung Asset Management.
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The US presidential elections are still ongoing. Still, it’s hard to predict who will win, if the loser will win, and when the bottom line will come out.
However, the magnitude of the impact that the results of this presidential election will have on the global economy will be less than in 2016. The United States is also in a difficult state to avoid these global standards, as the world is fighting COVID -19 and implementing a common economic policy of fiscal stimulus. In particular, the United States is a country that has a great influence not only in the United States but also in countries around the world. As investors and related workers around the world are paying attention to the domino effect of the US presidential election, the risks of uncertainty are expected to resolve in a short period of time. Reporter Chu Dong-hoon
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