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Trump or Biden? In any case, investors can stay cool

NHopefully around this time next week the Americans will have cleared the facts and elected a new president. Regardless of who wins this important election in the end – Donald Trump of the Republicans or Joe Biden of the Democrats – the winner will have a significant impact on the political framework of the United States and the international community over the next four years.

This is all the more true in light of the fact that the Americans also elect part of the Senate and the entire House of Representatives. The outcome of the congressional election will therefore show to what extent the next president can actually implement his policy.

For investors, on the other hand, the question arises as to whether the choice really has greater consequences on the stock exchanges. What is clear is that incumbent Donald Trump stands for lower taxes and less regulation, while Joe Biden’s program provides for higher tax rates for companies and wealthy households, as well as more government intervention in the areas of climate policy, health care and energy.

Stockbrokers see Biden ahead

Many financial experts believe that Joe Biden could win the election. According to American polls, his lead could speak for victory. This promotes the willingness of investors to take risks despite the rising corona numbers in many industrialized countries, according to the assessment of experts from the investment company NN Investment Partners.

They refer to the bull-bear index, which is currently at its highest level since the beginning of the year. However, it is not just Joe Biden’s growth in lead that is driving the index up. Supporting factors are also the confidence in the central banks, which are supposed to prevent a prolonged and deflationary weak demand, as well as the hope for vaccine delivery in the first half of 2021 and the significant recovery in China.

Market expert Maarten-Jan Bakkum, at NN Investment Partners, comments: “The steady increase in Joe Biden’s lead in the polls has been perhaps the most important positive factor in investor risk appetite in recent weeks. Growing expectations of a clear Biden win on November 3rd have eased concerns about a possible election challenge. Investors are not yet pricing in the risk that a Biden win, combined with a possible Democratic majority in both chambers of Congress, could lead to stricter regulations and higher taxes for American companies. At the moment, what counts most is reduced uncertainty. “

Matthew Benkendorf, financial strategist at Vontobel, also points out, with a view to the past, that market reactions are difficult to predict, but that election results would not have such a dramatic impact on the markets. “How the markets react to elections depends on more than who is elected.” Important factors are rather the valuation level of the markets, the economic environment, the economic outlook and, most importantly, the forecasts for corporate profits.

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