Navigating the Post-US Election Terrain

Macro Event: On Nov 6, 2024, Republican presidential candidate Trump announced his victory in the US presidential election.

Market Performance: The global market reacted with a return to the Trump trade 2.0. The USD, US stocks, BTC, and UST yields rose, while gold and oil prices fell.

Policy Implication: With the Republican Party securing the Senate and leading in the House, Trump's policy framework faces less resistance.

Key policies include:
Trade: Imposing a 10% tariff on all countries, 60% on specific countries, revoking China's PNTR status, and continuing industrial subsidies.

Fiscal : Reducing income taxes, increasing personal deductions, doubling repatriated profits, and raising estate taxes.

Monetary : Potential continued intervention in Fed's policies.
Immigration : Reinforcing strict border policies, deporting illegal immigrants, and cutting immigration-related spending.

Foreign Policy : Pushing for Russia-Ukraine negotiations, pressuring Iran, and reducing involvement in multilateral organizations.

Policy Impact Prediction: Trump's policies on immigration, tariffs, and fiscal expansion could lead to re-inflation, with potential obstacles for the Fed's rate-cut path. A Republican sweep means less resistance to policy implementation, benefiting US equities. Traditional energy development could lower oil prices, while reduced geopolitical risks may pressure gold prices.

China Market Analysis : The focus remains on domestic policy changes. Trump's trade and energy policies may pressure export-dependent sectors like appliances and automobiles and disrupt the new energy sector. However, China's growth stabilization measures since Sep 24 could offset external shocks.

Potential impacts include:
▪ Boosting domestic demand to counter external fluctuations.
▪ Increased focus on technological self-sufficiency.

Bondmarkets: Short-term concerns are minimal due to supportive monetary policies and expected liquidity injections. However, sustained fiscal efforts and improved fundamentals may warrant cautious bond investments.