[US Election Preview 2-1]A sneak peek of Biden concept stocks VS. Trump concept stocks ahead of stock market fluctuations

A sneak peek of Biden concept stocks vs. Trump concept stocks ahead of the stock market fluctuations.File photo

The AI theme boosted US and Taiwanese stocks in the first half of the year, but the US stock market election became a significant factor affecting the market in the second half of the year. An expert stated that the short-term market trend has become more volatile due to the bullish rise and election issues, with the intensification of volatility happening earlier this year. Market funds might shift towards larger technology stocks as a hedge. However, investors concerned regarding market fluctuations in the second half of the year may profit a month before the election and return to a prosperous market following the election.

After the first debate among US presidential candidates in June this year, Democratic candidate Joe Biden’s trailing margin widened from -1% to -2.5%, the largest gap since the beginning of the year. Biden’s performance in the first debate fell short of expectations, with his betting winning rate plummeting from 35% to 19.5%, a new low. Meanwhile, Republican Donald Trump’s betting winning rate rose to 54.3%, demonstrating steady improvement.

Biden and Trump: Six Industries Impacted by Policy Differences

To analyze the policy differences between Biden and Trump, we can examine six aspects: finance, currency, immigration, industry, trade, and geopolitics. Generally, Biden favors tax increases and continued renewable energy, while Trump supports tax cuts and expanded tariffs on Chinese goods.

Investors are primarily concerned with industrial connectivity. From a policy standpoint, the industries that would benefit from a Biden victory include green energy, infrastructure, semiconductors, and defense. Industries that might suffer include healthcare and traditional energy. Industries that would benefit from a Trump victory include petroleum energy, finance, healthcare, semiconductors, and national defense, while the industries that might face challenges are green energy and electric vehicles.

Concerning exchange rate trends, the comprehensive increase in tariffs following Trump’s election might strengthen the US dollar, which might also contribute to inflation and make it difficult for the Federal Reserve to reduce interest rates. This might further compel the Fed to adopt a hawkish stance, potentially leading to a restart of interest rate increases, further strengthening the US dollar. Additionally, Trump’s isolationism would increase geopolitical risks, boosting the demand for safe havens in the US dollar and sustaining its strength.

The average annual return in US stock elections is 7.5%. The key is whether the economy is good or bad.

Market expectations for the US presidential election have changed, causing recent stock market fluctuations. However, Prudential Investments stated that based on statistics since 1960, the average annual return rate for US stocks in each US presidential election year is 7.5%, slightly higher than 8% in non-election years. This indicates that the presidential election is not the determining factor impacting the stock market, but rather the state of the economy is crucial for its rise and fall.

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Biden Concept Stocks vs. Trump Concept Stocks: A Peek into the Election’s Market Impact

The first half of 2023 saw the U.S. and Taiwan stock markets soar on the back of AI-related themes. However, the upcoming U.S. presidential election is set to become a major influencing factor in the second half of the year. Experts predict an uptick in market volatility, with the timing of intensified fluctuations occurring earlier than usual. Hedge funds may shift their focus to larger technology stocks.

Investors apprehensive regarding market fluctuations in the second half of the year might find an opportunity to profit a month before the election and subsequently benefit from a resurgence in the market post-election.

Biden and Trump: Policy Divergences and Their Impact on Six Industries

The first debate between U.S. presidential candidates in June this year revealed a widening gap between Democratic Party candidate Biden and Republican candidate Trump. Biden’s trailing margin escalated from -1% to -2.5%, marking the largest gap since the beginning of the year. His performance in the first debate fell short of expectations, with his betting winning rate plummeting from 35% to 19.5% (a new low), while Trump’s rose to 54.3%, indicating a steady improvement.

To accurately analyze the policy differences between Biden and Trump, a detailed assessment of six key areas is essential: Finance, currency, immigration, industry, trade, and geopolitics. Overall, Biden advocates for tax increases and continued commitment to renewable energy, whereas Trump favors tax cuts and expanded tariffs on China.

From an investor’s perspective, the crucial aspect lies in understanding the industrial connectivity. Policy-wise, Biden’s election is projected to favor green energy, infrastructure, semiconductors, and defense industries, while industries like healthcare and traditional energy might face challenges. On the other hand, if Trump is re-elected, petroleum energy, finance, healthcare, semiconductors, and national defense are likely to benefit, while green energy and electric vehicles might experience setbacks.

Exchange Rate Trends: A Look at the Implications

Following Trump’s election, the comprehensive increase in tariffs might lead to a strengthening of the U.S. dollar. This, in turn, might contribute to a rise in inflation, making it difficult for the Federal Reserve to lower interest rates. Consequently, the Fed may adopt a more hawkish stance, potentially even restarting interest rate increases, further bolstering the U.S. dollar. Moreover, Trump’s isolationist approach might escalate geopolitical risks, driving up demand for safe haven assets like the U.S. dollar and maintaining its strength.

U.S. Stock Elections: Historical Returns and Economic Significance

Market expectations surrounding the U.S. presidential election have shifted, triggering recent stock market fluctuations. However, Prudential Investments, based on data since 1960, highlights that the average annual return for U.S. stocks in each U.S. presidential election year is 7.5%. This figure is slightly higher than the 8% return in non-election years. This suggests that while the presidential election plays a role, it’s not the sole factor dictating the stock market’s performance. The quality of the economy remains the key driver of growth and decline.

Overall, while the U.S. presidential election is bound to infuse volatility into the market, the long-term trend remains influenced by the economic environment. Investors must adopt a balanced approach, considering both the political landscape and the underlying economic fundamentals.