①In the final stages of the US election, investors are selling the Japanese yen and instead investing in cash, India, China markets, and Singapore dollars; ②Pictet Asset Management said: "We actually think China is a good place to hide."
On October 30th, Financial Association News (Editor Huang Junzhi) Before the US election that may affect global capital and trade flows, investors are selling the Japanese yen and instead investing in cash, India, China markets, and Singapore dollars.
As Asia is a major exporting region, stocks and currencies are very sensitive to changes in US trade policy, so after the voting ends and in the coming months, the Asian financial markets may experience significant volatility. This has prompted fund managers to avoid betting directly on outcomes, reduce exposure to vulnerabilities such as Japanese manufacturers, and bet on profitable Indian or Chinese stocks regardless of who takes the White House.
"We actually think China is a good place to hide," said Jon Withaar, manager of Pictet Asset Management's Asia Special Situations Hedge Fund. "Because the Chinese market has many domestic drivers and lower correlation with global asset trends."
"For us, the best approach is to sit on the sidelines and wait," he added.
In the final sprint before the official US election, the market seems more bullish on Trump: with his rising poll support, the "Trump trade" from stocks to bitcoin to the Mexican peso is making a comeback.
Currently, financial markets have started selling US bonds and buying dollars, expecting the Trump administration to exacerbate inflation. In Asia, selling low-yielding yen is the first choice, and the yen-to-dollar exchange rate is at historic lows.
Nick Ferres, Chief Investment Officer of Vantage Point Asset Management, said he does not directly trade election results, but holds short positions in the yen and Japanese stocks.
"Our feeling is that Donald will win, even possibly in a big Republican victory. This will boost the dollar, and Trump may lean towards supporting economic growth... The consequences could be higher interest rates, and even more rate cuts still being pursued by the Federal Reserve may not be achieved due to high prices," he added.
In addition, investors are also looking for markets with minimal exposure to tariff risks or other favorable factors (from demographics to China's stimulus plans) that seem to be working.
Goldman Sachs pointed out that emerging market funds have been increasing exposure to China and North Asia over the past month. Once the elections are over and the uncertainty hanging over investors is removed, this exposure may increase rapidly.
Gary Tan, portfolio manager at Allspring Global Investments, stated, "We believe that with China boosting its economy and the US cutting rates, the performance of emerging market stocks next year will outperform other markets."
Ray Sharma-Ong, Head of Multi-Asset Investment Solutions for Abrdn in Southeast Asia, mentioned that the Singapore dollar will remain strong against regional currencies, and the Indian stock market may also remain unaffected.
"India benefits from strong domestic economic growth, with a low proportion of exports to GDP, lower risks of potential trade conflicts, and a tendency towards service exports supported by strong earnings unrelated to technology," he added.
