US Election Results - Potential Policy and Investment Implications

Key takeaways:

With the election uncertainty behind us, we recently added to our existing US equity overweight. In the past 20 Presidential election years, the S&P 500 has finished the year in positive territory 18 times. The proposed tax cuts and likely deregulation under the Trump administration are likely to offer additional support to US stocks. The trend around re-onshoring, infrastructure investment and the technological revolution in the US remains strong. The financial and consumer discretionary sectors should benefit from a robust consumer, while the re-industrialisation should support companies involved in automation, optimisation of manufacturing processes and engineering.

Probable tariffs by the US can be headwinds for countries like Germany, Mexico and Korea, which are net exporters to the US. The UK should remain resilient as the US runs a trade surplus with it. India has a lot of locally focused investors and companies continue to do well there, supported by a strong domestic consumer, which should limit the impact. Mainland China will be one of the focus areas for tariffs, though the Chinese government aims to offset the impact and boost domestic growth through stimulus measures.

The risk-on environment can reduce the appeal of safe-haven bonds, which can increase volatility in the bond market. But with elevated real yields and reduced Fed cut expectations priced in by the markets, we think it continues to make sense to lock in attractive bond yields. Multi-asset strategies benefit from a strong opportunity set, given the many growth engines for equities, low equity-bond correlations and big dispersion between stocks.

https://www.hsbc.com.my/wealth/insights/market-outlook/us-election-results/

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Publish Date: Mon, 18 Nov 2024, 12:03 PM

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