It’s been a long and exciting week as we await the election results and finally the results are out!
Joe Biden emerged as the 46th elected President of The United States, ending four tumultuous years under Trump. Is it clear skies now? Not quite yet as we also have to see who makes up the senate and house. Will Biden’s push for more corporate taxes, more regulation, bigger stimulus be pushed through easily?
So what are we expecting?
Quote from Singaporehumblestock 30th Oct
Market has ran up quite a bit since we blogged at the end of Oct . S&P500 was trading around 3230 and we mentioned that it might have been a good time for investors to take some position, scaling into the markets then. Ever since then, S&P500 has risen around 8% so we won’t be surprised that market might have some near term profit taking given the run up.
- Democratic President would be deemed more anti-growth and pro-regulation as compared to the Republican President which introduced uncertainty into the market with new policies and agendas.
- Biden has proposed higher corporate taxes while Trump says he will maintain low taxes
- Market has run up quite a bit so some pullback is not unexpected.
That is one potential scenario that could play out and with any pullback, there might be a chance to scale into the markets again. IF market continues to rally, then enjoy the rally!
So some sectors/stocks we’re looking at!
GOLD! Read up on our previous article which we wrote just 2 weeks back! Gold prices has seen risen and might further given some short term uncertainty and with a fiscal stimulus, inflation could be on the cards and gold is considered a hedge against inflation and currency debasement. Interesting Fact:
Barack Obama was the last Democrat president, and if we will draw a conclusion based on his years in office, one could observe an immediate increase in gold prices right after he assumed presidency.
When Obama took office in January 2009, the gold price was just over $890, and by the end of his first term, the precious metal has risen about 88.6% to $1,685.
Foreign Policy – CHINA!
In his campaign, Biden says he will counter abusive Chinese economic practices. Biden helped to craft and promote the original Trans-Pacific Partnership trade deal. He now wants to renegotiate certain aspects of that. This suggests that tensions with China will not vanish overnight, even if Biden wins. It will be tricky for Biden to consider immediately lifting existing tariffs without imposing any other measures.
We might see a less harsh stance and erratic approach towards China, a more balanced and level headed policies. Asian equities in general could see some near-term relief, though we do not expect US and China to be best friends overnight but an improvement could be a positive sign.
China big techs are still on our list. Tencent, Alibaba, Meituan, Xiaomi, JD.com are just some that we are looking at.
SMIC ( 981.hk) is a another company that we’re looking at . Under trump’s administration it was under US restriction but could a biden administration ease some of the regulations? IF this happens, SMIC could see some recovery and also China has planning huge investment to develop its domestic semiconductor industry and counter Trump’s administration restriction. SMIC could potentially benefit from this.
Moving on : CLEAN ENERGY, EV & SOLAR POWER!
Electric cars, clean renewable energy are some of Biden’s new policies and agenda.
The electric vehicle industry has been soaring in 2020. If elected President, Biden has said that he plans to build more than 500,000 charging stations by 2030, restore the full electric vehicle tax credit, and institute strict regulations that would encourage the use of electric vehicles.
Counters like TESLA, NIO, XPENG could be potential winners!
HAIL (SPDR S&P Kensho Smart Mobility ETF),
PBW (Invesco WilderHill Clean Energy ETF) ,
QCLN (First Trust Nasdaq Clean Edge Green Energy)
SMOG (VanEck Vectors Low Carbon Energy ETF)
TAN ( Invesco Solar ETF)
2845.hk (Global X China Electric Vehicle ETF)
are just some of the ETFs that could benefit and have been rising steadily over the last few months.
Even though Biden has stronger impulse than Trump to break up the Big Tec, with antitrust policies, reform of corporate taxes if senate is not controlled by the democrats then these policies might be harder to pass which could bring relief to them. Short term we might see some uncertainty but it could once again present opportunities for entry. Names like Facebook, Amazon, Alibaba, Alphabet (google), AT&T are on our list.
Stocks with China Exposure
Stocks like Nike, Estee Lauder could see some relief are these are retail stocks with the highest exposure to China Market. Apple could also be a beneficiary.
Chart Source: macrotrends.net
It’s a lot to digest. In the long term we believe market tends to go up but positioning yourself in the right sector is equally as important. Oil&Gas sector as an example is probably one which we’ll avoid.
Got any questions? Feel Free to drop us a message and we’ll get back to you as soonest. Remember, investment carries risk and so always consult your adviser before making any move!
Have a good week and stay safe!