With just a few weeks left until the US presidential election, the outcome is expected to significantly impact global asset investments, as the US is the world's largest economy. Any measures taken will affect all investment assets globally.
In the meantime, the investment market is likely to be volatile, influenced by the popularity ratings of the candidates, both current President "Donald Trump" and challenger "Joe Biden." The first debate, although lacking clear policy visions, seems to have favored Biden, as reflected in his increasing popularity over Trump.
Mr. Sukit Udomsirikul, Managing Director of Research at SCB Securities, stated that the upcoming US election on November 3 will likely lead to considerable volatility in investments leading up to the election day, potentially slowing down overall trading due to policy uncertainties.
If Biden wins, the impact on the Thai stock market is expected to be clear and can be divided into two dimensions: the foreign investment flow, which may exit the US and return to emerging markets, including Thailand.
"Foreign investors may return to net buying after continuous selling, but we do not expect to see a significant influx of capital. Currently, Thai stocks are already at a high point, and the country has managed the COVID-19 outbreak well. However, a long-term issue is that Thailand has few technology stocks, so we need to see which industries in the country can grow with the new economy, such as food, alternative energy, electronics, and healthcare," he added.
The second dimension concerns the trade war. If Donald Trump wins, it is believed that the trade war between the US and China will continue. However, if Joe Biden wins, it is expected that the trade war will ease somewhat. A crucial factor that may prevent the Thai stock market from receiving positive influences is whether one political party can win the election and control both houses of Congress, which would stabilize the US economy and increase its attractiveness for investment.
Additionally, US economic policies may tighten if Biden wins, as he plans to increase the budget deficit by about $7 trillion over the next 10 years to support state spending on social welfare and infrastructure projects. He also plans to fund the increased deficit by raising tax revenues to $4 trillion, which will include corporate taxes and investment taxes.
In summary, over the next three months, we will see factors beyond economic issues gaining more weight, such as interest rate cuts and quantitative easing, which have already occurred. Expectations for economic recovery will thus rely on fiscal policy, which is also dependent on politics. Therefore, the overall picture in the fourth quarter is likely to see these factors continuously disrupt investment.
Mr. Sorapol Veerametkul, Senior Director at Kasikorn Securities, stated that if Biden wins, it will be a positive factor for the global economy, especially in terms of trade. The direction of a weaker dollar will continue, supporting commodity prices due to an improved global trade outlook. It is expected that the US stock market will have indices lower than emerging markets (EMs) due to risks associated with increasing corporate tax rates in the country.
However, there may be compensating factors if the Democratic Party cannot secure a majority in the Senate. Looking at the industry groups, we have a positive outlook on power generation, clean energy, and others that will benefit from lower oil prices.
Moreover, the US's reopening of negotiations with trading partners like Iran and Venezuela may positively impact TIPCO Asphalt Public Company Limited (TASCO) stocks, and Biden's administration may ease tensions between the US and China, potentially leading to tax reductions, which would improve the overall global trade environment, benefiting the commodity market and shipping industry, with stocks like Thai Vegetable Oil Public Company Limited (TVO) and Precious Shipping Public Company Limited (PSL) likely to benefit.
In the case of a Trump victory, it is believed that he will intensify the "America First" policy, coupled with uncertainties in foreign policy, especially regarding trade taxes with China and Europe, which may lead to a stronger dollar index. Tax levels are expected to remain low, benefiting dollar-denominated assets and capital flowing back into the technology sector.
For the oil and gas industry, it is expected that Trump will maintain his position as the number one oil and gas producer, aiming to push oil prices higher.
"In this scenario, we anticipate positive factors for the energy sector (PTT Exploration and Production Public Company Limited (PTTEP), dividend stocks, ICT group, REITs, and infrastructure funds, as well as stocks benefiting from low tax rates, such as Indorama Ventures (IVL)."
Mr. Nattachat Mekmasin, Assistant Managing Director at Trinity Securities, stated that regarding the US elections and their impact on the Thai stock market, it is essential to consider more than just who wins the election. We must also observe which party will hold the majority in both the Senate and the House of Representatives. Initially, it seems likely that the House will remain with the Democratic Party, as this will depend on the popular vote, which is quite reliable according to polls indicating that the Democrats have about 80% popularity.
If Biden wins and the Democrats control both the Senate and the House, it will positively impact the Thai stock market and emerging markets, as Biden's policies negatively affect high-income individuals and the stock market, especially if corporate taxes are raised, leading to capital outflows from the US into emerging markets, including Thai stocks. However, sectors that may be adversely affected include traditional energy and coal, as Biden supports clean energy usage.
The final scenario is if Donald Trump wins the election, with the Senate controlled by the Republican Party and the House by the Democratic Party, which will lead to the continuation of the trade war with China. The policies favoring US companies will likely cause emerging market stocks to perform worse than developed markets, while currencies in emerging markets will weaken, putting pressure on the Thai stock market overall, except for the electronics sector, which is expected to benefit.
SOURCE : www.bangkokbiznews.com
