Business
Trump or Harris? Chinese Stock Market Reacts to US Presidential Preferences and Predicted Geopolitical Tensions
Trump or Harris? Indications of their preferred US president can be gleaned from China and Hong Kong stock trends. Regardless of the election outcome, Daiwa Securities Group predicts that geopolitical conflicts will keep exerting pressure on Chinese stocks for the next four years.
During their recent debate, US Vice President Kamala Harris and ex-president Donald Trump didn't see eye to eye on many issues, but they both advocated for a hard-line approach towards the world's number two economy, employing tech limitations or tariff increases. Daiwa Securities Group suggests that irrespective of the election results, geopolitical conflicts will persistently affect Chinese shares for the next four years.
The aftermath of the debate could potentially worsen the already negative perception of China's stock market, valued at US$8 trillion, which saw the benchmark CSI 300 Index drop to its lowest point in over five years last week due to fears of a bleak economic growth forecast. The index has given up all progress made from the state's direct purchase of stocks and exchange-traded funds earlier this year, highlighting the ineffectiveness of regulatory attempts to curb the downturn.
China's economic resources and financial health could potentially experience more challenges following the US election, necessitating an increase in policy backing, as suggested by China Merchants Securities.
"Should Harris secure the election, it's highly probable she'll maintain the import duties levied by the Biden administration on essential Chinese goods, including electric vehicles," noted Zhang Jingjing, an analyst at the brokerage firm. "If Trump emerges victorious, Chinese exports may surge in the immediate aftermath, only to plummet later due to his robust tariff policy. A proactive domestic strategy will be required to mitigate the resulting impact."
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