Former US President Donald Trump’s victory over Vice President Kamala Harris in this week’s election has raised questions about how Asia will be affected. “At face value, Trump 2.0 is bad news for Asia, especially (especially) China,” analysts at Macquarie Research wrote in a Nov. 7 note, given the president-elect’s plans to raise tariffs and cut taxes. “When it passes, (tariffs) will sweep through Asia, especially China (and) will have to increase volatility and compress multiples because of the uncertainty.” Even so, analysts say the region is “more prepared than in 2016” and investment opportunities remain, mainly due to a weaker yen and China’s stimulus. Market reaction to the election results has been mixed, with India’s Nifty 50 index down more than 1% and Japan’s Nikkei 225 down 0.25% on Thursday. In China, the blue-chip CSI 300 index closed more than 3% higher, while Hong Kong’s Hang Seng index rose 2% as economic data and hopes of further stimulus lifted stocks. Market moves in Asia came after gains in US stocks on Wednesday pushed the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite to all-time highs. “The positive reaction to the stock market,” following political uncertainty, said Tai Hui, head of APAC market strategy at JP Morgan Asset Management. Sectors to watch Looking ahead, Hui believes “and the soft landing of the economy and regular rate cuts by the Fed(eral Reserve) should be positive for both stocks and bonds, as well as choosing alternative assets, such as infrastructure and transportation.” This will lead to a “structural shift in the global supply chain … (and) could boost infrastructure spending in ASEAN and South Asia,” he said. Touching on the impact of potential tariffs on imports – especially from China – to the US, strategists believe that “the impact on earnings is direct … mainland China.” “While slower exports will indirectly affect investment and domestic consumption, Beijing’s fiscal and monetary policies can provide some offset. Therefore, the measures that can be taken from the (National People’s Congress) meeting this week can be material to address the concerns of investors from external factors,” he. added. Stocks to play As investors await the outcome of a closely watched meeting of China’s top legislature, Macquarie is looking for “purely domestic plays,” such as China’s Yum fast-food restaurant chain. Analysts also like automotive manufacturer XPeng in the electric vehicle space because “the energy transition and battery supply chain will see compression multiples in the uncertainty.” In Japan, Australian investment banks are betting on equities that they hope will benefit from a weaker yen. The currency has fallen against the dollar after Trump’s win, hitting 154.7 per dollar on Wednesday – the weakest level since July 30. On Thursday, it regained some ground to trade around 153.64. Macquarie’s top picks in Japan include test equipment maker Advantest, electronics and electric vehicle maker Mitsubishi Electric and power equipment maker Mitsubishi Heavy. It also saw potential in Japanese pharmaceutical companies like Daiichi Sankyo and Chugai Pharmaceutical. Elsewhere, the bank is still bullish on technology despite potential tariffs on Asian exports, saying TSMC is the best, semiconductor giant SK Hynix, infrastructure services provider Quanta Services and smartphone maker Xiaomi remain good bets. – CNBC’s Lim Hui Jie contributed to this report.
The sector – and stocks – bought in Asia after Trump won, according to analysts
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