UBS Global Wealth Management: Biden and Blue Wave
A Democratic sweep of the White House and the houses of Congress is UBS Global Wealth Management’s base case scenario.
«Political events rarely a have long-lasting impact on financial markets, but this US election is different,» said Adrian Zuercher, head of global asset allocation for the bank’s chief investment office. «For Asia, all eyes are on relations between the U.S. and China.»
Asia Upside
In addition to single-digit upside for global equities, UBS expects a Democratic sweep to create 10 percent potential upside for Asian markets.
This is due to the potential for a large fiscal stimulus package of up to $3 trillion that could result in a stronger recovery, stronger markets and a weaker dollar – a nearly sure-win (96 percent) for Asian equity outperformance, according to historical data.
China Bull
«In the near term, we would likely see less immediate risk of Chinese firms facing de-listing in the U.S,» Zuercher added on a Biden win.
«China’s new-economy stocks could benefit from offshore inflows as headline risks recede and as the prospect of higher US corporate taxes come into focus.»
The bank is moderately risk-on with equities and commodities as its most preferred assets, though it continues to advise clients to remain globally diversified. Within Asia, it prefers the Singapore market for its attractive valuations and India for its strong earnings outlook. It also prefers Chinese government bonds over U.S. Treasuries due to higher yields.
