Investors should not underestimate the geopolitical consequences of the US election, no matter whether Donald Trump and Joe Biden wins, according to Eaton Vance.
Although the Trump administration had shifted the narrative on China, there should be no expectations that Biden would “go soft on China” either, Eric Stein, co-director of global income at Eaton Vance Management, noted.
“If Biden gets elected, I don't expect him to go soft on China as Trump has claimed, but rather to be far more hawkish than he was as Vice President in the Obama administration.”
He stressed that much had been said about the economic impact of President Trump being re-elected, Biden winning but the Republicans keeping the Senate, or Biden winning with a clean Democratic sweep of Congress.
“Certainly, there would be a big impact on tax rates and regulatory policy depending on these outcomes,” according to Stein.
He said he would anticipate that Biden's approach would be different — far more multilateral with US allies in Asia, and with Europe more in the fold than it has been under President Trump.
“So I think the geopolitical ramifications of the US election should not underestimated and could even be more important than the impacts from a domestic tax and regulatory policy perspective,” Stein said.
“At this point, however, I think Biden should still be considered the frontrunner. Recent momentum for President Trump depends heavily on what happens with the economy and the coronavirus. Only a month ago, large majorities of potential US voters expressed fear about how much the pandemic seemed to be accelerating, which lowered the probability of Trump's re-election,” Stein concluded.