The 2024 US general election is about to settle, RCP national poll data shows that since late October, Trump's support has surpassed Harris, as of October 28, Trump and Harris' support rates are 48.4% and 48% respectively.
Wisdom Finance APP learned that Zhongjin released a research report stating that the impact of the 2024 US general election on the market and industries includes, firstly, changes in trade policies may affect Chinese companies' exports and overseas markets, urging China to boost domestic demand urgently. In addition to the US raising tariffs, the more important aspect is the income uncertainty brought by the uncertainty of Sino-US trade. Harris' main economic policy is not a significant increase in tariffs. She believes that the burden of tariffs ultimately falls on American consumers, requiring further control of the prices of daily necessities. Secondly, if exports to the US face higher tariffs, Chinese companies may choose to expand their markets in other regions. With the advancement of the overseas expansion strategy, Chinese products have gained a higher market share in developing countries.
Third, whether from the perspective of enhancing total factor productivity to drive economic growth, or enhancing the ability of domestic substitution, innovation and technological progress are expected to receive policy support. Nurturing and positioning emerging and future industries are the key focus. Strategic emerging industries and future industries include next-generation information technology, new energy, new materials, advanced manufacturing, aviation and aerospace, medical biotechnology, among others, including specific sub-fields. Fourth, the impact of energy price fluctuations. Trump's 2024 campaign policy emphasizes controlling energy prices, advocating for increased energy expenditure, and lowering energy prices through increased investments in petrochemical energy, which may cause prices and profits of resource-based enterprises like coal and oil to decline. However, the decline in energy prices upstream may reduce the energy costs for downstream enterprises, thereby increasing profitability. The input-output table shows that basic chemical raw materials, cement, public utilities, and other industries are the most profitable.
Event:
The 2024 US general election is about to settle, RCP national poll data shows that since late October, Trump's support has surpassed Harris, as of October 28, Trump and Harris' support rates are 48.4% and 48% respectively. The most critical swing states in this US election are 7, namely Pennsylvania, Wisconsin, Michigan, North Carolina, Georgia, Nevada, and Arizona, totaling 93 electoral votes. Currently, Trump's support rate in the 7 swing states is leading Harris to varying degrees, indicating that Trump's probability of winning is increasing.
Looking ahead, the key time points in the US election process include election day, the electoral college voting, the announcement of the electoral college voting results, and the presidential inauguration ceremony, with corresponding dates of November 5, 2024, December 17, 2024, January 6, 2025, and January 20, 2025.
With the increasing probability of Trump being elected president, the global major markets are heating up the "Trump trade". Similar to the policy proposals expressed during the previous presidential campaign and presidency, Trump still adheres to the concept of "America first", emphasizing on US economic growth and manufacturing prosperity. The core measures to achieve economic goals include: easing regulations, tax cuts, trade protection and supply chain reshoring, increasing low-cost energy supply, promoting innovation, etc. Trump's governance principles will have a certain impact on major asset classes, possibly mainly manifested as "strong dollar, neutral gold, rising interest rates", etc. In comparison, Harris also attaches importance to economic growth, believing that government intervention should promote social fairness, reduce the cost of living for the middle class, enhance social security, etc., which may result in the global asset performance as "weak dollar, strong gold, declining interest rates".
CICC's main points are as follows:
There are several aspects that may impact the performance of the A-share market in the United States presidential election.
First, if Trump is elected, trade protection measures may affect exports and profits of Chinese manufacturing companies. Trade policies can affect the export scale and profits of Chinese goods, thereby influencing related export industries and industry chains. Imposing high tariffs is not the main economic policy taken by Harris. She believes that the burden of tariff increases will ultimately be borne by American consumers, and inflation needs to be further regulated. Second, the election results may to some extent influence the policy intensity and space in China. The domestic monetary policy space will also consider changes in external conditions. Low interest rates are an important viewpoint of Trump's economic policies because low interest rates are conducive to increasing residents' willingness to invest in housing, promoting corporate capital expenditure, and thereby boosting economic growth. At the same time, Trump believes that the president should strengthen intervention in the Federal Reserve. Harris has indicated that she "will not interfere with the Fed's decisions." Third, election results may affect international fund risk preferences and directions of flow.
Reviewing the trend of the A-share market during the previous term of the Trump administration, although trade protection and technological restrictions imposed on China caused some disturbances in the short term, the medium and long-term performance of the A-share market still depends mainly on domestic economic fundamentals and policy responses. In 2018, the United States began implementing tariffs against China, coupled with domestic financial deleveraging. The A-share performance was relatively weak. However, following policy responses and improved economic expectations in 2019-2020, the market regained momentum. From the perspective of industry structure at that time, after the trade policy was introduced, industries with high export proportions such as home appliances, light industry, electronics, machinery, and automobiles were impacted to varying degrees. However, the US policies in areas like semiconductors have prompted the relevant departments to enhance their focus on technological progress and have made market investors pay more attention to domestic concepts such as semiconductors and technical hardware. Banking and other sectors were less affected by trade frictions and played a stabilizing role in the stock market.
How might the US election impact the investment style of A-shares?
The impact of the 2024 US election on the market and industries includes, first, changes in trade policies that may affect Chinese companies' exports and going global, urging China to urgently enhance domestic demand. In addition to increased tariffs by the US, the more important aspect is the income uncertainty brought about by the uncertainty in US-China trade. Harris's primary economic policy is not to significantly increase tariffs. She believes that the burden of tariff increases will ultimately be borne by American consumers and there is a need to further control daily commodity prices. Second, if exports to the US face higher tariffs, Chinese companies may choose to expand markets in other regions. As the going global strategy progresses, Chinese products have gained a higher market share in developing countries.
Third, whether from the perspective of enhancing total factor productivity to drive economic growth, or enhancing the ability of domestic substitution, innovation and technological progress are expected to receive policy support. Nurturing and positioning emerging and future industries are the key focus. Strategic emerging industries and future industries include next-generation information technology, new energy, new materials, advanced manufacturing, aviation and aerospace, medical biotechnology, among others, including specific sub-fields. Fourth, the impact of energy price fluctuations. Trump's 2024 campaign policy emphasizes controlling energy prices, advocating for increased energy expenditure, and lowering energy prices through increased investments in petrochemical energy, which may cause prices and profits of resource-based enterprises like coal and oil to decline. However, the decline in energy prices upstream may reduce the energy costs for downstream enterprises, thereby increasing profitability. The input-output table shows that basic chemical raw materials, cement, public utilities, and other industries are the most profitable.
November industry allocation recommendations.
Main over-allocated industries: nonferrous metals precious metals, electrical equipment, semiconductors, consumer electronics, insurance; Main under-allocated industries: eco-friendly and water affairs, e-commerce, architectural decoration and engineering, building materials, medical services.
Risk
The uncertainty of the US election results, the uncertainty of the subsequent US new presidential policies and campaign statements, and the uncertainty of our country's policies and corporate responses.
