Regional EMs are also cheering the election of Democrat Joe Biden in the US Presidential Elections. Biden is expected to show more restraint towards China vis-a-vis his predecessor. “A less caustic US-China trade relationship can only be positive for global growth,” writes RHB analyst Andrey Wijaya on 19 November. MSCI Asean rallied 12% to 689 points from 614 points in the last week compared to just about 6% in the MSCI EM Index during the elections.
With recent Phase 3 vaccine trials indicating positive results, analyst Lim Say Boon of CGS-CIMB sees developed markets (DMs) and emerging markets (EMs) to be largely vaccinated by 2021 and 2022 respectively. This in addition to a Biden victory in the recent US Presidential Elections signal upsides for Asean and the Asia-Pacific markets going forward.
Although the timing of the announcements was within previous market expectations, the very act – and the claimed high levels of effectiveness – gives the market more visibility on forward earnings. The announcement of such positive developments reduces the equities risk premium, and hence supports higher stock prices in general,” writes Lim on 19 November. Pfizer claims that its candidate has 90% effectiveness while Moderna claims its candidate has 94.5%.
