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9 Nov, 2020 11:51

Emerging markets could see influx of cash in event of Biden victory – Standard Chartered

Emerging markets could see influx of cash in event of Biden victory – Standard Chartered

The “more benign” political environment, if Democratic candidate Joe Biden wins the US presidential election, could be very beneficial for emerging markets, Standard Chartered Bank predicted.

According to its global head of research, Eric Robertsen, “There’s quite a bit of cash sitting on the sidelines and that has been hiding in US assets for a few years.” 

Robertsen told CNBC that, over the past decade, the S&P 500 Stateside has “outperformed emerging market equities by 100 percent.” That money could “potentially be deployed” into foreign and emerging markets, representing one of the “key potential pivots” if Biden wins the election, he said.

According to Robertsen, Asia is set to be the first region to benefit from this shift for two reasons. Firstly, “Asia’s markets tend to be a little bit lower beta. In other words, [to experience] a little bit lower volatility than some of [their] peers ... and cousins across other emerging markets.”

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The other “incredibly powerful” factor, according to Robertsen, is China, which has been a “strong recovery force,” both economically and in terms of financial assets. He said the Chinese yuan “remains very stable,” and that serves as an “attractive pull” for currencies in Asia. As a result, the region seems most likely to be the “first port of call” for investors in emerging markets, the expert said.

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