Citywire - For Professional Investors

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

What a Biden win means for China-US relations, Asia

We asked 13 asset managers what a new administration under president-elect Joe Biden means for Asia.

David Chao, Invesco

Global market strategist, Asia Pacific ex-Japan

The region will benefit from recast US-China relations. Although I don’t see a U-turn in US-China relations, I think that a Biden presidency will certainly be more measured in its approach to China, and will focus less on the trade deficit.

The shrill rhetoric that has dominated the Trump White House and rattled Asua Pacific markets will certainly dissipate and should translate into positives for Greater China markets.

Secondly, a Biden presidency coupled with a divided Congress means that the economic aid package in 2021 will be a lot smaller which will slow the US recovery and shave off a bit of the positive economic momentum in Asia’s export-oriented countries.

Share this story

David Chao, Invesco

Global market strategist, Asia Pacific ex-Japan

The region will benefit from recast US-China relations. Although I don’t see a U-turn in US-China relations, I think that a Biden presidency will certainly be more measured in its approach to China, and will focus less on the trade deficit.

The shrill rhetoric that has dominated the Trump White House and rattled Asua Pacific markets will certainly dissipate and should translate into positives for Greater China markets.

Secondly, a Biden presidency coupled with a divided Congress means that the economic aid package in 2021 will be a lot smaller which will slow the US recovery and shave off a bit of the positive economic momentum in Asia’s export-oriented countries.

Daniel Gerard, State Street Global Markets

Senior multi asset strategist

Asia, particularly emerging markets in Asia will be a strong beneficiary of the current environment due to its relatively better handling of the pandemic, its exposure to technology and recovering consumer, and a recovering global trade story.

The two biggest near term-risks to Asia remain. A renewed geopolitical tensions without a clear goal, and a resurging pandemic reversing gains in global trade.

 

Paul Sandhu, BNP Paribas Asset Management

Head of multi-asset quant solutions, Asia Pacific

The impact in Asia will be a more medium to long term indirect effect tied to Covid-19 and stimulus deals in the US but also the foreign policies that the administration invokes which should be of more global collaboration.

Specifically, with China, the last four years could be seen as setting up a negotiation position for the next four years.  And this could be positive more for Asia overall on a medium to long term basis.

Robert St Clair, Fullerton Fund Management

Strategist

Asian equities could also benefit if the prospect of a more dovish US foreign policy results in US-China relations stabilising, and potentially improving over time.  Even if US-China relations don’t improve materially, Asian equity fundamentals should still remain very supportive.

As such, earnings expectations across Asia continue to improve, and lead the global recovery, and North Asian equities, in particular, have remained strong.

Paul O’Connor, Janus Henderson

Head of multi-asset investments

The result should be positive for Asian equity markets, reflecting expectations for a significant US fiscal stimulus and less combative trade policies. Biden’s win could well be the catalyst for a big rotation from US technology stocks into Asia tech.

Going forward, laggards like materials, industrials and bank stocks could end up being buoyed by the prospect of a big fiscal stimulus and enthusiasm for technology stocks might be dampened by the prospect of higher taxes and more regulatory intrusion.

Christiaan Tuntono, AllianzGI

Senior economist, Asia Pacific

A Biden presidency would likely be positive for US-China trade and bilateral relations on the surface. The strategic competition between the US and China is not likely to alter much under the upcoming Biden administration, as the more hawkish stance taken by the US on China receives bipartisan support.

On trade, we believe Biden is likely to take a much more multilateral approach to unite its allies in Europe and East Asia to tackle China. This shall help put global and US-China trade back onto a less disruptive course while rejuvenating the role of a multilateral rule-based trade system.

Kerry Craig, JP Morgan Asset Management

Global market strategist

The implications of a widening US deficit, possibly more predictable U.S. foreign policy, and lower bond yields is a weaker US dollar. All of which are positive for emerging markets, and notably, Asian assets.

When combined with the greater success in handling the Covid-19 crisis and the continued recovery in the global goods and manufacturing cycle, this bodes well for the markets that have performed well so far this year: Korea, Taiwan and China.

Sean Taylor, DWS

Group’s CIO Apac & head of emerging market equities

Biden and his administration might not change the policy stance on US and China tension, especially on the fight for technology dominance. However, we expect a more predictable geopolitical stage.

The uncertainty surrounding the US and China tension and further significant escalation in tariffs is likely to decline. This may give Asian equities more room to outperform.

Nuveen

Global investment committee

 

Although skepticism about globalization is widespread and increasingly bipartisan, we expect trade policy will be less adversarial and more predictable with Biden in the White House, with a greater emphasis on multilateral action and global cooperation. Existing tariffs may remain, however, especially those placed on imports from China.

Aidan Yao, AXA Investment Managers

Senior emerging Asia economist

Overall, we think the US election result represents a modest positive for Asia. The lack of a unified congress will create some hurdles for a sizable fiscal stimulus package in the near term, but we still expect a watered-down plan to be passed in early 2021.

For Asia, while the region’s improved macro fundamentals will put upward pressure on interest rates, we think that will be curbed by the Fed’s continued monetary stimulus as it assumes the heavy-lifting role in economic support.

Shaniel Ramjee, Pictet Asset Management

Senior investment manager, international multi-asset team

Asia has managed to contain Covid, however growth in exports are still vital, which is the channel by which Rest of the World growth can impact certain Asian industries. However, we expect goods consumption to remain steady even through restrictions, but any further supply chain disruption will slow the recovery. 

We continue to favour secular growth themes of U.S. and Asian technology as well Chinese domestic consumption, driven by structural growth potentials and strong fundamentals.

Frank Tsui, Value Partners

Senior fund manager

If the republicans get the senate, they will do same multilateral approach to global trade as the Democratic’s in the abovementioned.

There will be less expansionary compared to a blue wave. However, it is likely to prolong the low rate environment in the US and the dollar weakness, which will continue to be a tailwind for emerging markets including Asia.

Chong Jiun Yeh, UOB Asset Management

CIO

We anticipate that the Biden Administration will favour diplomacy and international engagement, which bodes well for Asia and will in turn boost the performance of Asian equities and currencies.

Share this story

dot
dot
Read More
dot