Seeking refuge in Asia to avoid presidential election risk
‘Wait-and-see mode’ to reduce positions in Japan and Hong Kong
Attention is also paid to bonds from Korea, Indonesia, and India.
▲Former U.S. President Donald Trump is campaigning in Greensboro, North Carolina on the 22nd (local time). Greensboro (USA)/Reuters Yonhap News
With the US presidential election just a week away, investors are seeking ‘investment havens’ in Asian markets. In fact, it is preparing for the possibility that former President Donald Trump, the Republican presidential candidate, will be elected.
On the 29th (local time), Reuters reported that global investors are reducing their positions in the recently weakened yen, stockpiling cash, or taking refuge in investment destinations that are relatively insensitive to the outcome of the U.S. presidential election, such as Asian bonds or the Indian stock market. did it
The Asian financial market is comprised of countries with a relatively high dependence on exports, so it is sensitive to the results of the U.S. presidential election and resulting changes in trade policy. Accordingly, volatility may continue in the coming months even after the US presidential election is concluded. For this reason, there is a lot of movement to find a ‘refuge’ in the Asian asset market.
John Wydar, a fund manager who runs an Asian hedge fund at Fixet Asset Management, reduced his positions in Japan and Hong Kong, where foreign selling is likely to be concentrated if former President Trump is elected, and entered a ‘wait-and-see mode’. At the same time, he evaluated, “Mainland China moves with domestic drivers and has a low correlation with global asset movements, so it is a good situation for investment.”
▲Japanese yen banknotes are visible. Reuters Yonhap News
Some investors are taking a short position on the Japanese yen. Nick Perez, Chief Investment Officer (CIO) of Vantage Point Asset Management, said, “We believe that former President Trump will win, and we also believe that the Republican Party can sweep the congressional elections.” He added, “If this happens, the U.S. base interest rate “The path may increase, the dollar may strengthen, and the yen may weaken against the dollar,” he analyzed. The value of the yen against the dollar has already fallen 6.5% this month alone, recording the largest drop against the currencies of 10 major countries.
The Indian market is also attracting attention. This is because the ratio of exports to gross domestic product (GDP) is not high compared to other Asian countries, so concerns about potential trade conflict due to the results of the presidential election are low and economic growth is maintained at a high rate.
Some institutional investors are seeking refuge by focusing on the Asian bond market. According to Bloomberg News, global asset management companies such as Allianz Global Investors, Franklin Templeton, and Gama Asset Management diagnosed that bonds from Asian countries other than China, such as India, Indonesia, Malaysia, the Philippines, and Korea, will be safe havens. What these regions have in common is that they have recently cut interest rates or are expected to benefit from the U.S. Federal Reserve’s (Fed) interest rate cuts and China’s economic stimulus measures.
According to Bloomberg, as of the 25th, foreign investment in the Indian bond market this year amounted to $15.3 billion (about 21 trillion won). As of the 28th, $3.7 billion in funds had flowed into Indonesia, and $2.6 billion had flowed into Malaysia as of September.
Bloomberg reported that Korea recently cut its benchmark interest rate for the first time in four years, and that Russell, the UK’s Financial Times Stock Exchange (FTSE), recently added Korea to the World Government Bond Index (WGBI), the world’s largest bond index, showing that Korean bonds are resilient. Diagnosed as receiving.
However, in the case of this presidential election, former President Trump and Democratic presidential candidate Vice President Kamala Harris are engaged in a fierce battle, so it is predicted that it will be difficult to immediately gauge the impact on future U.S. policy even immediately after the presidential election. Some are concerned that it may take longer than previous presidential elections for the final winner to be announced.
