1 month ago
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PETALING JAYA: As the Democratic candidate shapes up to be the winner in the US presidential election, equity markets across the globe have transitioned from whipsaw movements to solid rallies.
On the domestic front, Bursa Malaysia’s FBM KLCI closed 36.88 points or 2.52% higher at 1,501.49 points today as a lead for former US vice-president Joe Biden began to firm up.
The local bourse saw 6.92 billion stocks changing hands with a value of RM3.89 billion, ending the day with 1,096 gainers versus 204 losers.
On the other major Asian stock markets today, Hong Kong’s Hang Seng Index closed 3.25% higher,, Tokyo’s Nikkei 225 went up 1.73%, and Shanghai’s composite index jumped 1.30%.
In Europe at noon today, London’s FTSE 100, Frankfurt’s DAX 30 and Paris’ CAC 40 were all higher.
In the US yesterday, the Dow Jones Industrial Average gained 1.34% and the S&P 500 closed 2.20% higher.
As at 11.30pm Malaysian time today, figures by the Associated Press placed Biden in the lead with 264 electoral votes, six votes shy of the 270 required to secure the presidency, while the incumbent president, Donald Trump, garnered 214 votes.
Inter-Pacific Securities head of research Victor Wan said it will not be smooth sailing for Democrat Biden as president – if he indeed wins – as the Republicans have the upper hand in the US Senate, which will impede his ability to enact policies.
“Senate aside, I think it’s too early to say how a Biden presidency will play out as he hasn’t outlined much about his policies during the campaign period,” he told SunBiz.
Wan opined that given the former vice-president’s priority towards public health and combating the ongoing Covid-19 pandemic, the healthcare sector might be a beneficiary.
On the trade front, he projected that nothing much will change with a red-to-blue shift, as the trade stance adopted by Trump would still be in place.
“With Biden, I still think there will be a lot of trade wrangling with China,” he said.
On the other hand, a second term for Trump would translate to more of the same, according to the head of research.
“With a fresh mandate, he might enact more hardline protectionist measures in his second term.”
The ‘more of the same’ sentiment brought by a Trump win is echoed by Public Investment Bank Research (PIVB Research), which expects a minimal near-term impact to Malaysia as the administration is likely to focus on domestic-related issues, relating to health and security.
“Longer term, however, the spectre of renewed battles with China and Trump’s “Great America” stance and his disruptive global policies does not bode too well for us given our relative dependence on trade as a growth driver,” it said in a report.
The research house noted that he managed to finally label China as a “currency manipulator” in August 2019, but the call was reversed in January 2020 when China agreed to refrain from devaluing its currency.
Should there be four more years of Trump, it opined that the US’ fractious relationship with China will continue to be put to the full test, though immediate and full attention is likely to be given to tackling the Covid-19 pandemic, with the first order of business being the hammering out of a fiscal stimulus package.
Meanwhile, the research house highlighted that the plus from a Biden win is the likelihood of less volatile market swings, economic meltdowns notwithstanding, as the new administration is also likely to focus on similar domestic-related issues of health and security.
“A Biden win should also result in a relatively sedate market reaction given the more conciliatory and less caustic tone expected to be struck domestically and globally,” it said.
Over the longer run, PIVB Research noted that the last two Democratic presidencies, Bill Clinton and Barack Obama, have seen periods of economic prosperity and relative strength in the market, albeit slightly delayed for Obama post-Global Financial Crisis which he “inherited”.
It surmised that energy firms particularly green energy stocks, and those orientated towards infrastructure, growth, trade and agriculture are ones likely to benefit given policies skewed in that direction.
“Market sentiment will also be lifted by the prospect of greater policy clarity and a second round of stimulus in 2021.”
It opined that a second term for Trump could be a boon to the banking sector, defense, pharmaceuticals and biotech stocks.
However, PIVB Research highlighted that the Budget 2021 announcement today will be of more relevance, one which will be expansionary in nature to “restart” Malaysia’s economy.
“Uncertain political conditions despite calls by the Yang Di-Pertuan Agong for a halt to all politicking may continue to cast a pall on local market conditions however. Heightened levels of uncertainty will be the order of the day again, though ensuing volatility will continue to throw up trading opportunities until the dust fully settles.”
English (United States)