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How The 2024 US Presidential Election Could Impact The Malaysian Stock Market?

Trump’s victory may lead to big shifts in industries with ties to Chinese exports.

 

With the 2024 US presidential election less than 2 months away – penned in for 5 November 2024 – there is increasing attention on how the results may sway the investment markets. 

The torch for the Democratic candidate has been handed to current Vice President Kamala Harris, while Donald Trump is making a comeback run for a second non-consecutive term. If Donald Trump wins, he will be only the second US President to run non-consecutive terms. 

In this article, we look at how the outcome of the 2024 US Presidential Election may affect Malaysia’s stock market. The answer for which sectors Malaysians should keep an eye out for may hinge on who wins: Kamala Harris or Donald Trump. 

Read Also: Is It Better To Convert Your Investment Returns In USD To MYR Or Hold Them In Your Investment Account? 

Kamala Harris vs Donald Trump – Who Holds The Edge? 

As expected polls show the race is incredibly tight, especially in key “battleground states,” where neither candidate holds a decisive lead. Kamala Harris holds a slight edge over Donald Trump, but the contest remains too close to call. 

The BBC puts a Kamala Harris win at 48% compared to a Donald Trump win at 46%. 

Tariff War To Be Reignited? 

Donald Trump is ready to dive in headfirst into another trade tariff, proudly dubbing himself a “tariff man” on X (formerly Twitter).  

 

Source 

From revitalising the US auto industry and making childcare more affordable to keeping would-be border crossers at bay, Trump believes tariffs can be effective – eyeing rates that could soar as high as 100% or even more! 

Tariffs on Chinese goods have emerged as a major issue in this election. During the Trump administration between 2017 and 2021, he imposed trade tariffs on a range of imports from steel and aluminium to washing machines, solar panels, and many other goods from China. In total, this impacted over USD380 billion worth of trade and effectively raised taxes by nearly USD80 billion.  

Earlier this year, Trump proposed raising tariffs on all Chinese imports by 60% or more and suggested a blanket 10% tariff on all US imports, signalling a potential escalation of protectionist measures, and more specifically targeting the US-China trade war he initiated during his office term.  

While both candidates signalled a move away from traditional free trade policies, Trump has adopted a more aggressive stance with his rhetoric on trade and tariffs, while Harris is viewed as a safer bet to avoid a full-blown trade war with China. 

Sectors That May Benefit From Donald Trump Winning A Second Term 

If Trump wins in 2024, we can expect relatively big shifts that could rattle certain industries, especially those with stronger ties to Chinese exports. Companies with significant revenue exposure to China may also face greater obstacles as trade tensions escalate – likely leading to retaliatory measures from China.  

However, traditional energy companies, like those in oil and natural gas, may benefit from Trump’s pledge to roll back restrictions on domestic oil production. 

On the other hand, clean energy and electric vehicle (EV) companies, which have thrived under Biden’s Inflation Reduction Act, might struggle under Trump. His plans to reverse Biden’s EV policies and cut tax credits for buyers could impact the entire clean energy supply chain, including battery makers and parts suppliers. 

Sectors That May Benefit if The Baton Is Successful Passed To Kamala Harris 

If Kamala Harris wins, she will become the first female president in US. A successful passing of the baton to a Democratic candidate may also mean we are likely to see continued expansion in renewable energy, electric vehicles, and utilities sectors. Solar stocks are likely to thrive under her leadership, buoyed by continued Democratic backing for renewable energy initiatives.  

Homebuilders may also catch a break, as Harris has proposed up to USD25,000 in down-payment assistance for first-time homebuyers and tax incentives for those focusing on starter homes. Plus, her plan to create a USD40 billion innovation fund could spur new advancements in housing construction.  

However, drugmakers may face tighter regulations, as she aims to cap out-of-pocket costs for prescription medications at USD2,000 a year. Overall, Harris’ win could mean a more supportive environment for growth-oriented industries while keeping a watchful eye on regulations. 

Read Also: Malaysian Investors’ Guide To Opening An Account With Interactive Brokers (IBKR) 

How Will Malaysia’s Stock Market Perform? 

As we look ahead towards the 2024 US Presidential election, it’s clear that the political jousting is just heating up. We’ve also seen a second assassination attempt on Trump, though it’s unlikely to give his polling any boost.  

This year’s stock market has been riding high on solid earnings growth forecasts, but those could face a shake-up if economic growth, consumer spending, corporate investment, or hiring start to cool off.  

While many are anxiously watching how the election outcome might sway the market, history tells us to take a breath. Yes, we might see some short-term market fluctuations in response to election events, but those are often fleeting. Ultimately, long-term trends are driven more by the broader economy than by who sits in the White House.  

So, remember to keep your eyes on the bigger picture, rather than blindly play to the sectors that are poised to benefit from a win for either candidates. Ultimately, it’s still the overall economy, not just the election, that will shape the stock market’s fate in the long-term. 

Read Also: Rakuten Trade, FSMOne, moomoo Malaysia, M+ Global, KenTrade: Guide To Online Stock Brokerages In Malaysia 

 

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