In a speech in Dunmore, Pennsylvania, Democratic presidential candidate Joe Biden announced that if he is elected president in November, he will launch a $700 billion plan to stimulate economic growth to make up for the "serious economic losses" caused by incumbent President Donald Trump's failure to fight the epidemic.

Biden criticized Trump for focusing too much on the stock market during the novel coronavirus pandemic and that he wanted to end the "era of shareholder capitalism." One of the policies described is to raise taxes on companies, and he plans to raise the corporate tax rate to 28 per cent, much higher than the 21 per cent set after Mr Trump's 2017 tax cuts.

In recent weeks, Biden has taken the lead in key states and national opinion polls.In national polls, Trump's approval rating has fallen by 8 to 9 percentage points, and his chances of winning re-election are less than 40%, compared with 50% in May.Goldman Sachs Group, a strategist at Goldman Sachs, pointed out earlier this week that based on market pricing forecasts, the Democrats looked likely to win the White House, Senate and House of Representatives with 62 per cent, 61 per cent and 85 per cent, respectively, up from 43 per cent, 30 per cent and 61 per cent on February 26.

Who will win control of the Senate will be the key.Republicans currently have a majority of 53 to 47 in the Senate. If Republicans remain in control of the Senate, Democratic proposals to raise personal and corporate taxes and adopt proposals such as the "Green New deal" will be blocked.

"if this is a close election and Biden wins, then I expect Republicans to continue to control the Senate, but if Biden is far ahead, then Senate control will fall to Democrats," said Greg Valliere, chief US political strategist at AGF Investments. He said that as Biden's lead in the polls expands, the possibility of the Democratic Party in full power is rising.

The radical tax increase policy may not be implemented.

While it is widely believed that Mr Biden's November victory will have a negative impact on Wall Street, Byron Wien, a senior investment strategist at Blackstone Group, disagrees. "if Biden is elected, his first priority will be to restore the economy to 2019 levels, and sharp tax increases and tighter regulation will undermine the economic recovery," he said.

Wayne also said, "if the market thinks his policy will shift to the far left, then there may be a more negative reaction." NowThe market seems to have accepted the fact that he may win the election, but also agrees with me that Biden will not take immediate action on tax and regulatory issues。」

A team of JP Morgan equity strategists led by du Bravko Lakos-Bujas (Dubravko Lakos-Bujas) said they believedThe impact of the Democratic Party's victory on the stock market is neutral to slightly positive。

History shows that challengers to incumbent presidents tend to take a radical stand during elections, but only become neutral after the election. Biden's proposed policy priorities were put forward before the outbreak, when the economy was still healthy. In other words, if Biden wins, his more extreme policy stance is unlikely to be implemented.

Lakos-Bujas said that given the current weak economy, the next administration is likely to give priority to policies that contribute to corporate recovery and job growth rather than policies that may curb economic growth. this means that the potential reversal of corporate tax (Trump cut corporate tax from 35 per cent to 21 per cent in 2017) could end up lower than the 28 per cent now proposed by Mr Biden.

Several major policies of the Democratic Party to benefit the market

Morgan Stanley's team of analysts believes that, includingInfrastructure spending, more aggressive trade policies and higher minimum wagesDemocratic policy proposals are actually good for the earnings of companies in the S & P 500 and will largely offset the negative impact of higher corporate taxes.

A resounding Democratic victory is expected to lead to a package of at least $1.5 trillion in possible infrastructure proposals, according to a team of Wolfe Research analysts led by Chris Senyek. Analysts expect the bill to focus on clean energy and other environmental initiatives.

Senjek also believes thatThe Democratic Party will implement a more active trade policy than the Trump administration, saying that American companies that currently have to pay high tariffs and American exporters with great exposure to the Chinese market will be the first beneficiaries。

The proposal to raise the federal minimum wage, which is supported by many Democrats, should be neutral or positive for S & P 500 companies. This is because higher aggregate demand will offset the pressure on profit margins, especially for large companies with greater pricing power, says Mr Lakos-Bujas.

There is also the area of health care. Senyek said health care was the most important issue before the general election before the outbreak. He said investors should consider that Biden will establish Medicare under the patient Protection and Affordable Care Act (he opposes universal health insurance, while Democratic rivals Sanders and Warren support it). He also proposed the creation of a public plan to compete with private health insurance plans. Senjek believes that if the Democrats win a resounding victory in health care, hospitals and health care providers that rely on the number of patients will benefit.

How do investors ride the "blue wave"?

As the political trend increasingly turns to the "blue wave" (blue represents the Democratic Party), it is time to figure out how to ride it.

Wayne said that by 2022, the profits of listed companies are likely to return to normal, when the vaccine should also be developed, the economy will pick up sharply. With expected earnings of $162 a share in 2021 and $186 in 2022, the S & P 500 trades at 19 times forward earnings in 2021 and nearly 17 times in 2022. Historically, such valuations are not cheap, but because interest rates are very low, stocks are strongly attractive to investors.

According to the policies proposed by Biden, here are some companies that JPMorgan Chase & Co believes will benefit from the Democratic Party's resounding victory.

In the field of green technology, companies that may benefitIncluding Tesla, Inc. (TSLA), NextEra Energy (NEE), Nikola (NKLA), SolarEdge Technologies (SEDG), Cree (CREE), Enphase Energy (ENPH), First Solar (FSLR), TerraForm Power (TERP), Ormat Technologies (ORA), Sunrun (RUN) and Sunnova Energy International (NOVA).

In the area of infrastructure, companies that may benefitIncluding Caterpillar Inc (CAT), Jacobs Engineering (J), United Rentals (URI), Aecom (ACM), Lincoln Electric Holdings (LECO), MasTec (MTZ), Valmont Industries (VMI), Terex (TEX) and Granite Construction (GVA).

Companies that may benefit if Sino-US trade tensions ease under a more active trade policyIncluding Procter & Gamble Co (PG), Thermo Fisher Scientific (TMO), Danaher Corp (DHR), Nike Inc (NKE), Boeing Co (BA), 3M Company (MMM), DuPont de Nemours (DD), CMI (CMI), Otis Worldwide (OTIS) and Stanley Black & Decker (SWK).

In the field of health care, companies that may benefitIncluding Johnson & Johnson (JNJ), CVS Health (CVS), Humana (HUM), Centene (CNC), McKesson (MCK), AmerisourceBergen (ABC), Cardinal Health (CAH), Teva Pharmaceuticals (TEVA) and Mylan (MYL).