Former U.S. President Donald Trump’s victory over Vice President Kamala Harris in this week’s election has raised questions about how Asia will be affected. “On the surface, Trump 2.0 is bad news for Asia, especially China,” analysts at Macquarie Research wrote in a Nov. 7 report, given the president-elect’s plans to raise tariffs and cut taxes. “Once passed, (tariffs) will sweep across Asia, especially China, and as uncertainty prevails, volatility should intensify and compress multiples.” Even so, analysts say the region is “less prepared than in 2016 “More fully” investment opportunities remain, especially given the weak yen and China’s stimulus measures. Market reaction to the election results was mixed, with India’s Nifty 50 index falling more than 1% on Thursday and Japan’s Nikkei 225 index falling 0.25%. Meanwhile, in China, the blue-chip CSI 300 index closed more than 3% higher, while Hong Kong’s Hang Seng Index rose 2% as economic data and hopes of further stimulus boosted stocks. U.S. stocks surged on Wednesday, pushing the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite to record highs, amid volatility in Asian markets. Tai Hui, chief market strategist for Asia Pacific at J.P. Morgan Asset Management, said the “positive reaction in the stock market” was due to reduced political uncertainty. Sectors to Watch Looking ahead, Xu believes that “a soft landing in the economy and steady interest rate cuts by the Federal Reserve should have a positive impact on stocks and bonds, as well as selective alternative assets such as infrastructure and transportation.” He added that this will bring “a shift in global supply chains.” Structural shifts…(and) are likely to increase infrastructure spending in ASEAN and South Asia”. When it comes to the impact of potential tariffs on U.S. imports, especially those from China, the strategist believes that “given that more than 85% of MSCI China’s primary revenue comes from the United States, the direct impact on earnings … is likely to be limited. “Chinese mainland. “While the slowdown in exports will indirectly affect domestic investment and consumption, Beijing’s fiscal and monetary policies may have some offsetting effects. Therefore, the measures that may be taken at this week’s (National People’s Congress) meeting may be helpful in eliminating investor concerns.” Concerns about external factors play an important role,” he added. Stocks to watch As investors await the outcome of a closely watched meeting of China’s top legislature, Macquarie is eyeing “domestic pure plays” such as fast-food chain Yum China. Analysts are also bullish on automaker Xpeng Motors in the electric vehicle space, as China’s “energy transition and battery supply chain may be compressed by multiples due to rising uncertainty.” In Japan, the Australian investment bank is betting on stocks expected to benefit from a weaker yen. After Trump’s victory, the yuan fell against the U.S. dollar, hitting $154.7 on Wednesday, its lowest level since July 30. Macquarie’s top picks in Japan include test equipment maker Advantest, electronics and electric vehicle maker Mitsubishi Electric and electrical equipment maker Mitsubishi Heavy Industries. It also sees potential in Japanese pharmaceutical companies such as Daiichi Sankyo and Chugai Pharmaceuticals. Elsewhere, the bank still favors technology stocks despite potential tariff increases on Asian exports, saying top picks TSMC, semiconductor giant SK Hynix, infrastructure services provider Quanta Services and smartphone maker Xiaomi remain good choose. —CNBC’s Lim Hui Jie contributed to this report.
