The presidential race in the US was nothing short of drama. Team Trump and Team Biden locked horns for becoming the next US President elect. Amidst the pandemic and the political uncertainty that the US seems to be plagued withcurrently, how will this election will impact the US markets. More importantly, how will the Biden-led team affect the global market and emerging markets such as India? Which sectors are going to be affected majorly? Let’s have a look!
The outcome of the election will likely not affect political relations with India. But certain sectors and therefore the markets could be affected by the election – which is why investors need to stay alert to any sort of market volatility.
How will the Indian market get affected by the election?
It all depends upon the political relationship with India. Both candidates, Biden and Trump have contrasting views against China. Biden’s approach involvesworking on improving US relationship with China but Trump’s approach is quite the opposite. He has been quite vocal on his views against China and has identified the country as the only one responsible for the global pandemicthat is CoVid.
(Credits: The Presidential profiles on Twitter)
Considering Trumps ordeal to re-count the votes, it seems to be highly unlikely. Biden will lead be the next President elect of the US.
Keeping this in mind, the market of India will not be affected drastically due to similar views of the two candidates.
To understand the market volatility, the views of the candidates in terms of jobs, trade policies and immigration should be addressed.
Biden, representing the democrats, plans to ensure work towards climate change and renewable sources of energy. He plans to create millions of middle-class jobs to boost his support on climate change and workout towards the global climate issues.
Trump, a Republican, is a strong believer in self-sufficiency. He is inclined towards pro-development and has voiced his support on ‘Made in America’ services and commodities. His idea to create employment is to spend on a $2 trillion infrastructure bill – which covers the losses made due to the pandemic.
Biden’s planis to help America’s position in the global economy by investing at home in innovation and the middle classes first. Developing an unison with its neighboring countries, US plans to tackle China – instead of setting high tariff rates.
Trump issued a trade war with China the moment he became the president in 2016. His stance of ‘Made in America’ has boosted the local economy and has issued high tariffs on countries where American companies are suffering.
Biden and Trump have contrasting views on immigration. The Democrat-led government plans to work on a comprehensive immigration policy which does not affect the immigrants. Less restrictive policies shall be implemented, helping those going to the US specifically.
Donald Trump’s immigration policies fall under his “America First” program, which seeks to protect American workers and industries.It’s a departure from decades of a U.S. immigration policy that centered on family reunification, asylum, and safe harbor of refugees.
Trump 2020 vision
Trump planned to create 10 million new jobs in 10 months, develop a coronavirus vaccine by the end of 2020, bringing back 1 million manufacturing jobs from China,drain the globalist swamp by taking on international organizations that hurt American citizens.
The Republican comes from a business backgroundwho hasn’t shied away from speaking against China and blaming them for the pandemic. Imposing tariffs on $370 bn worth of goods imported from China was his key ingredient to tackle the issue. In the FY 2019-20, the total estimated value of the bilateral trade between India and China stood at a staggering $89 bn.
Biden 2020 vision-
Joe Biden looks to build 500 million solar panels, slashing U.S. carbon emissions within 15 years and rapidly expanding a government-sponsored health care plan. He wants to overhaul the way policing are conducted on American streets and the way success is measured in primary schools.
The democrat plans a haul of $700 billion on American products and research which shows a significant move in the political landscape. Climate change and innovation towards renewable sources of energy is his primary objective and thus, developing ‘middle-class’ jobs.
Impact on specific sectors
The new President elect, Joe Biden is expected to bring good news for certain sectors back in India. Trump plans to shed 1$ trillion on infrastructure while the latter plans to spend around 3$ trillion over the next decade. It includes a spending budget of US $750 billion to improve healthcare and revamp education, respectively and $1.7 trillion is to tackle climate change.
Noticing India as potential allies to fight China, Biden plans to support Indian-led IT companies like Tata Consultancy Services, Infosys, Wipro, HCL technologies and Tech Mahindra. These IT companies have played a huge role in recruiting people which goes against Trump’s idea on immigration.
About 80% of the active ingredients in medications taken in the US. come mainly from India and China while Trump emphasized on self-made medications. Trump plans to push in money to develop the medication in the country while Biden plans to work to fight the Pandemic, getting virus tests and public health plans.
Sun Pharmaceuticals Ltd, Lupin Pharmaceutical Inc and Dr Reddy’s laboratories are some of the Indian Pharma giants in the United States and would be directly affected by the results of the election.
Biden’s less stringent approach will benefit Indian companies to lend a hand in developing America’s infrastructure overall.
Tata Steel group, JSW and SAIL are the big companies in the US working for the infrastructure.
What does this mean for the Indian Stock Market?
A Biden presidency may also see a renewed push towards a rules-based trading system across the world — instead of outright disdain as was the case under Trump — as well as a move away from the protectionist approach that has been getting strong across the world.
The outcome should not affect the behavior of an Indian investor. We can expect some short-term fluctuations but over the duration of time, the economic implications could more or less be the same. Sectors such as IT, Pharma, and Steel that are expected to be affected directly by the outcome of the election are going to see growth shortly.
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