Stocks likely to benefit most from a Biden victory include China Aviation Oil and HPH Trust, which have significant operations in China. Firms with production facilities in China and sales exposure to the US could also benefit, with the analysts favouring Valuetronics and Hi-P. The former in particular has a strong balance sheet and attractive valuations, with its FY21 forward price-to-earnings (P/E) ratio at 10.4 vis-a-vis its peer’s 20.6.
As an unusual 2020 US Presidential campaign draws to a close, local investors are hoping that Democratic candidate Joe Biden wins the upcoming elections. According to DBS analysts Yeo Kee Yan and Chung Wei Le, a Biden victory would see a more constructive relationship with China, benefitting Chinese equities.
“[Biden] will likely adopt a more “open and negotiable” approach with China. Tariffs may be reduced, which is positive for China’s recovery that should lift sentiment for China-related stocks,” they write in a broker’s report on Nov 3. They see firms with production facilities in China and sales exposure to the US benefiting from stabilised US-China relations. A Trump win, on the other hand, will likely spell greater uncertainty for stocks exposed to China due to his unilateralist foreign policy and hostility towards China, Yeo and Chung argue.
