Asia Markets: Mixed Open Awaits U.S. Elections, China Parliament Meeting

Asia markets are set to open mixed on Monday, with investors gearing up for a busy week ahead, including the U.S. presidential election and China's National People's Congress (NPC) meeting. The week will be marked by heightened volatility and uncertainty as markets await key developments from both events.

The U.S. presidential election, scheduled for Tuesday, is expected to have significant implications for Asian markets. A victory for the Democrats is likely to maintain the status quo, with a focus on multilateral trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which would benefit export-driven Southeast Asian economies. Conversely, a Republican win could lead to more protectionist policies, potentially increasing tariffs on goods from Asia, particularly in sectors like textiles, electronics, and agriculture. This could significantly reduce the competitiveness of these industries in the U.S. market, impacting countries like Vietnam, Malaysia, and Thailand.


China's NPC meeting, kicking off on Monday, is expected to reveal more details on fiscal support, which could significantly impact regional market sentiment and performance. The scale and nature of this support will be crucial in determining the trajectory of Asia markets. A substantial fiscal stimulus package could boost investor confidence, leading to a positive market reaction. Conversely, a lackluster or delayed announcement may result in mixed or negative sentiment. Investors will closely monitor the meeting's outcomes to gauge the potential impact on regional economies and markets.


In a "Trump 2.0" scenario, Asian markets could face significant headwinds due to potential tariff increases and trade tensions with China. A broad 10% global tariff and up to 60% tariffs on Chinese goods, as advocated by Trump, would have substantial impacts. A 60% tariff on Chinese exports to the US could result in a 2.4% growth shock for China, affecting $500 billion in exports (15% of total US-China trade and 2.8% of China's GDP). While extreme measures are less likely, even a 0.9% growth impact would be significant. For Taiwan, tariffs on Chinese semiconductors could benefit Taiwanese foundries but also pose geopolitical risks. Active portfolio management will be crucial to navigate this uncertainty.

Asian markets are expected to react cautiously to changes in U.S. foreign direct investment (FDI) policies, with potential shifts in FDI flows impacting regional economies significantly. A Democratic victory may maintain the status quo, while a "Trump 2.0" administration could introduce marked changes, including higher tariffs and stricter FDI regulations. Southeast Asian countries, heavily reliant on U.S. FDI, may face reduced investment if protectionist policies are implemented. Conversely, a more open U.S. policy could boost regional economies through enhanced market access and stronger trade relationships.

In conclusion, Asia markets are poised for a mixed open as investors brace for the U.S. presidential election and China's NPC meeting. The outcome of these events could have significant implications for regional markets, with potential shifts in trade policies, tariffs, and FDI policies impacting economies across the region. Investors should closely monitor these developments and adjust their strategies accordingly to navigate the uncertainty and volatility that lies ahead.