UBS has placed a slightly higher chance of a victory in the US election by Kamala Harris over Donald Trump. This could lead to a status quo for the economic and market outlook.
UBS forecasts that Kamala Harris has a 55 percent chance of winning the upcoming US presidential election, according to a virtual media briefing attended by finews.asia. This includes a 40 percent chance of a Democratic President with a Republican Senate and Democratic House as well as a 15 percent chance of a Democratic sweep.
On the other hand, it places a probability of 35 percent for a Republican sweep and a 10 percent chance for a Republican President with a Republican Senate and Democratic House.
«Given how close the election is, it is highly unlikely that we know who the President is going to be the night after the election and this could introduce things like market volatility,» said Mark Haefele, chief investment officer of UBS Global Wealth Management.
Asia Impact
Within Asia, the bank believes a Trump victory will result in headwinds. If the Republican candidate delivers targeted tariffs at the beginning, China could see a 0.7 percent reduction in GDP growth while the overall Asia ex-Japan region could see a 0.8 percent reduction in the first year. But if he aims for broad tariffs, China and Asia ex-Japan could both be hit by a 2 percent growth reduction.
Under a Trump win, there could be a fairly limited impact on Chinese equities as the country has diversified its trade partners since 2018. On the currency, the yuan could revisit 7.5 to 8.
On the other hand, a Harris victory is expected to lead to a status quo, though there could be some tightening in terms of high-end semiconductors.
