📉 Nikkei is down nearly 5% -> here are 43 recession-proof Japanese stocks from our screenerUnlock Now

JPMorgan sees a post-election opportunity to add to emerging market asset exposure

Published 09/30/2024, 07:25 AM
© Reuters
US500
-
DJI
-
IXIC
-

Investing.com -- Investors could see a "more sustained opportunity" to increase their exposure to emerging market assets once the risks associated with the upcoming US election pass, according to analysts at JPMorgan Chase (NYSE:JPM).

However, in a note to clients on Monday, the analysts said that for now they are choosing to "fade the bounce" -- or trade against -- a rebound in emerging market equities last week following China's announcement of a raft of new stimulus measures aimed at rejuvenating activity in the world's second-largest economy.

"The stimulus package unveiled last week is helpful, but likely more needs to be done to address growth concerns. Largely monetary support, rather than fiscal, might be less impactful for strengthening final demand," the analysts wrote.

Meanwhile, they flagged that after Donald Trump, the current Republican presidential candidate, won the 2016 election, emerging market assets underperformed developed market peers by 10% for two months. The analysts called this a "meaningful sell-off."

This year the race between Trump and Democratic rival Kamala Harris remains tight in the final weeks before the Nov. 5 vote. Recent polls have suggested that Harris holds only a narrow lead over Trump, while the two are close in several crucial swing states that will likely influence the outcome of the ballot.

A win for Trump -- whose economic plans are highlighted by steep import tariffs, including a 60% duty on those coming from China -- could cause emerging market assets to be a "laggard," the JPMorgan analysts said.

They added that this would particularly be the case in the event of a so-called "red sweep," in which Republicans win the White House and control of both chambers of the US Congress.

"The risk at present is the prospect of a 60% tariff on all Chinese imports, along with the inflationary impact from tariffs on other countries, as well as the potentially stronger [US dollar], which could all lead to the selling of [emerging market] assets in the event of Trump winning the upcoming election," the analysts said.

On the other hand, a Harris victory -- and a Congress divided by Republicans and Democrats -- could lead to these assets "start[ing] to perform better more sustainably," the analysts argued. The vice president has hit out at Trump's tariffs plans as a "sales tax," but has not explicitly disavowed current President Joe Biden's move to expand tariffs on items like steel and electric vehicles coming from China.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.