Biden currently leads in national polls and surveys of key states. The election, deteriorating US-China ties and an uneven economic recovery from the pandemic are among the key risks confronting investors. Goldman Sachs Group Inc. last month warned them to prepare for volatility around the Nov. 3 vote.
The MSCI Asia Pacific Index is up about 22% since Trump’s inauguration, but has lagged the S&P 500 index since the White House ratcheted up the trade war in 2018.
Here is a range of views on the possible US power shift.
“We think a Biden win would be a more positive outcome for Asia equities, with a more predictable and less openly hostile foreign policy toward China likely,” UBS Global Wealth Management strategists led by Mark Haefele wrote in an Aug. 17 note. “A potential increase in taxes under Biden would have little direct impact on Asia.”
appear to view a Biden-Harris win as having potential to reduce political and FX volatility as well as lead to less immediate policy aggression against China,” analysts from Nomura Holdings Inc. said in an Aug. 19 note, referring to vice presidential nominee Kamala Harris. This could be a “significant benefit” to emerging market and Asian currencies, including the yuan, they wrote.
A Biden administration “is likely to de-escalate political tensions with China,” said Sebastien Galy, a senior macro strategist at Nordea Investment Funds SA in Luxembourg, adding “far greater stability should help the Asia Pacific and inflows into these economies.”
“Biden would probably focus more on strengthening the U.S. alliance system, with increased attention to human rights issues, but would probably be less aggressive on trade issues,” said Dan Fineman, co-head of Asia-Pacific equity strategy at Credit Suisse Group AG. “A Trump re-election would leave Asia largely where it is now, but possibly with some relief on China-U.S. relations,” he said. After the vote, it’s also possible Trump “would feel less need to act tough on China,” he added.