US Elections 2016

Asian stocks up as markets bet on Clinton win

A magazine cover with US presidential candidate Hillary Clinton is displayed at a newsstand in Shanghai, on Nov 8, 2016.
A magazine cover with US presidential candidate Hillary Clinton is displayed at a newsstand in Shanghai, on Nov 8, 2016. PHOTO: AFP

Asian stocks inched up cautiously yesterday as investors bet on Democratic nominee Hillary Clinton winning one of the most combative United States presidential elections in history.

Analysts expect a volatile trading session today as the election results stream in this morning, Singapore time.

The boost to Asian markets is expected to continue in the immediate aftermath of the election if Mrs Clinton wins, while a Donald Trump presidency would likely lead to a knee-jerk selldown.

However, the longer-term impact of either outcome remains uncertain.

Singapore's Straits Times Index climbed 19.29 points, or 0.69 per cent, to 2,820.24. Hong Kong's Hang Seng Index and the Shanghai Composite Index each added 0.47 per cent, while Tokyo slipped 0.03 per cent.

DIRECTION MAY CHANGE

Depending on the combination of president and Congress, the US growth trajectory might change and we need to understand the extent to which that spills over into Asia.

THE NOMURA REPORT, on the uncertainty of the long-term impact of the presidential result in the United States and on Asian economies.

Mrs Clinton's chances of winning got a boost on Sunday, when the US Federal Bureau of Investigation said it stood by its July finding that she was not guilty of criminal wrongdoing in her use of a private e-mail server as secretary of state.

She is seen by investors as the "status quo candidate", offering greater certainty and stability.

Meanwhile, Mr Trump's anti-free trade rhetoric has stoked fears that his victory will fuel a revolt against globalisation - a key concern for Asian exporters reliant on US demand.

 

With Asian markets the first to trade on the results today, a Reuters report said that banks such as HSBC have beefed up staff in preparation for possible tumult on financial markets.

Some banks are also raising margin requirements for trading to cope with a possible spike in volume or volatility, the report said.

 

A Nomura Asia equity strategy report said a Clinton win will "result in a relief rally in Asian equities" as uncertainty is reduced and hedges are unwound.

But this lift is expected to be unsustainable and investors should use the opportunity to trim their holdings.

This is because regardless of who wins, the long-term impact both in the US and on Asian economies is uncertain.

"Depending on the combination of president and Congress, the US growth trajectory might change and we need to understand the extent to which that spills over into Asia," the Nomura report said.

A version of this article appeared in the print edition of The Straits Times on November 09, 2016, with the headline 'Asian stocks up as markets bet on Clinton win'. Print Edition | Subscribe