30 Asia-based market strategists reveal how they’re playing the U.S. election

Stock market analysts in Asia without doubt do not agree on who will win the U.S. presidential election. But they’re pretty unified on how they plan to play it.

CNBC asked 30 strategists a series of interviews about the U.S. election and their current investments, offering them anonymity in exchange for their views. All 30 respondents were based in the Asia-Pacific sphere.

CNBC carried out the email-based early last week, and subsequently followed up with the strategists to ask if they had changed their opinion following the first presidential debate and the news that President Donald Trump tested positive for coronavirus. (Of the 30 respondents, three reformed their predictions on the election’s outcome.)

The Asia-based investors were sharply divided on the central political matter. Twelve analysts predicted a victory for former Vice President Joe Biden, 11 predicted a contested election, and seven picked Trump to win.

“This (diagnosis) hearsay adds some uncertainty, and Biden has gained a bit with market predictors,” one analyst said via e-mail. “But too much is quiet unknown to expect a change yet.”

A clear majority of market analysts polled by CNBC are rear cash and buying relatively safe assets such as gold ahead of the Nov. 3 vote. Nineteen of the 30 strategists responded they are increasing their cash holdings, including the U.S. dollar and Japanese yen. They’re also moving into gold and U.S. Resources.

Ten of 30 said it’s a good time to rotate out of expensive stocks such as technology portions and into less popular sectors: They identified travel and tourism, as well as stocks that track the wider restraint including banks and industrials. Buying more “defensive” stocks like health care, consumer goods  and dividend lineages is another investment strategy that was identified.

Only one of the 30 market players polled by CNBC sees value in variant investments including real estate investment trusts (REITs), infrastructure bonds, or the much-discussed “ESG” funds that aspect environmental, social and governance factors into their holdings.

Asked which they determine to be more attractive between U.S. technology stocks or Chinese tech names, a clear majority — 18 of the 30 Asia-based analysts — cited Chinese callers as their preferred choice.

“Asian tech is cheaper than the U.S., less risk of tradable options, and less regulatory jeopardize,” said one, who explained that speculative options trading linked to U.S. tech names makes them more tension-ridden than their Asian counterparts.

Another strategist said that “a Biden win could subject U.S. technology to fine fantastic regulation.”

The IPO markets in Hong Kong, mainland China and South Korea have drawn much investor concern in 2020, and “that interest is only set to grow,” said another respondent. 

The scheduled initial public offering of Chinese economic technology company Ant Group “will spur upward revaluations in tech” in Asia, said another analyst. Alibaba affiliate Ant Platoon, which is still controlled by Alibaba founder Jack Ma, operates the wildly popular Alipay mobile payment app in China.

Sixteen of 30 market experts said they’re bullish on Asian markets, despite the near-term volatility. Those respondents maintained they believe Asia has more upside once the election risk is out of the way, given the apparent fading of the coronavirus in Asia and traces of economic recovery.

“We are constructive for 2021 outlook and expect Asian markets to bounce back eventually, should we see volatility in the next team a few of months around U.S. elections,” said one strategist.

“That said,” the strategist continued, “Asian equities will inclined to outperform U.S. equities in the near term,” especially if Biden wins the election, “which could weigh on U.S. equities but desire likely have limited direct fundamental impact on Asian equities.”

The strategists said a Biden victory would be most positive for China, Japan and South Korea, while a Trump win purpose be beneficial for India, Vietnam, the Philippines and also Taiwan.

Biden as president would be expected to take a more reasonable approach toward China, whereas a Trump reelection would be seen strengthening India’s position in order to counterbalance China’s dominance.

But a moderate tone toward China from a President Biden may not translate into less tension between the people’s two biggest economies.

“The Democrats have given no indication that they will be any easier on China than the GOP” has been, predicted one of the participants.

That view came through clearly among the 30 poll respondents when they were invited what a Biden presidency would mean for U.S.-China relations. Even under Biden, tensions with China choice continue, because “the entire foreign policy, defense and intelligence establishment in the U.S. are anti-China,” as one said.

Still, most analysts broke that a second Trump term could bring higher tension around Hong Kong, human to be fairs and the Covid-19 pandemic. And an economic “decoupling” between the two countries would remain in the cards.

—CNBC’s Naman Tandon and Celestine Francis Xavier play a parted to this report