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Emerging markets might see a money inflow after Biden win: StanChart

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SINGAPORE — Emerging markets may gain advantage from a political atmosphere that appears set to turn out to be “more benign” following the victory of Democratic candidate Joe Biden within the U.S. presidential election, Standard Chartered Bank’s Eric Robertsen predicted.

“There’s quite a bit of cash sitting on the sidelines and that has been hiding in U.S. assets for a few years,” Robertsen, world head of analysis on the British lender, advised CNBC’s “Street Signs Asia” on Monday.

He defined that over the past 10 years, the S&P 500 stateside has “outperformed emerging market equities by 100%.”

That cash might “potentially be deployed” into international and rising markets, representing one of many “key potential pivots” following Biden’s election win over incumbent President Donald Trump, he mentioned.

People have fun at Black Lives Matter Plaza throughout from the White House in Washington, DC on November 7, 2020, after Joe Biden was declared the winner of the 2020 presidential election.

Andrew Caballero-Reynolds | AFP | Getty Images

Asia influence

Asia is about to be the primary area to learn from this shift for 2 causes, Robertsen advised.

Firstly, he mentioned: “Asia’s markets tend to be a little bit lower beta. In other words, a little bit lower volatility than some of (their) peers … and cousins across other emerging markets.”

Robertsen mentioned the opposite “incredibly powerful” issue is China, which has been a “strong recovery force” each economically and when it comes to monetary belongings. In a September report, China was the one nation among the many Organization for Economic Cooperation and Development’s estimates anticipated to expertise progress in 2020.

The Chinese yuan “remains very stable,” and that serves as an “attractive pull” for currencies in Asia, he mentioned. As a outcome, the area appears more than likely to be the “first port of call” for buyers in rising markets.

Meanwhile, Invesco’s David Chao mentioned there are two “immediate” and “notable” impacts from the U.S. election on Asia-Pacific markets.

With the U.S. showing “far less likely” to get a big fiscal stimulus package deal as hopes for a Democratic sweep fade, the nation’s financial restoration is predicted to sluggish, mentioned Chao, world market strategist for Asia-Pacific ex-Japan on the agency. That might “shave off” some optimistic financial momentum in Asia’s export-oriented international locations, he advised CNBC’s “Squawk Box Asia” on Monday.

Secondly, Chao added: “It will be near impossible for a Biden White House to push through bold policies such as higher corporate taxes.”

“I think that both U.S. and APAC stocks should rise in this environment as fears of a Democrat sweep and a hotly contested election fade away,” he mentioned.

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