Investors watch the market's movements on the trading floor of a securities firm. — VNA/VNS Photo

 

As the White House race enters its decisive phase, the market’s attention shifts to how the upcoming US presidential election will affect Vietnamese stock performances.

 

The contest between Democratic Vice President Kamala Harris and Republican candidate and former President Donald Trump highlights significant policy differences.

 

Harris is expected to support liberalised trade and international cooperation, maintaining many of President Biden's policies. Trump, on the other hand, advocates for bilateral trade agreements and protection of domestic industries.

 

A recent analysis by Mirae Asset securities, which reviewed US election outcomes from 1944 to 2020, shows that post-election stock market performance varies depending on the party that wins.

 

Statistics indicate that in 14 out of 20 elections, the S&P 500 rose three and six months after the election and rose in 13 of 20 cases one year later.

 

However, there were declines in 11 of 20 cases at five days post-election (T+5) and 10 of 20 at ten days post-election (T+10).

 

This trend suggests that the market generally requires time to digest the new administration's policies, with the second and third years of a presidency often reflecting a more substantial impact on stock performance.

 

Currently, the S&P 500's price-to-earnings ratio (P/E) stands at 21.9, above the three-year average of 18.8 and the five-year average of 19.5.

 

After the election, the US stock market may see some adjustments or slower growth until the new policies’ effects become visible in economic growth data.

 

Limited impact on Vietnam market

 

The US election will likely have some impact on Vietnam’s economy.

 

Mirae Asset's analysis suggests that if Trump returns to power, his policies might include a mix of stringent trade protections and higher tariffs on imports from countries other than the US, including possible increases of 10-20 per cent tariffs.

 

This could benefit Vietnam as supply chains would likely shift away from China, but the country could also face risks from strict US trade policies. The US is currently Vietnam’s largest export market, with key exports including electronics, textiles and garments.

 

If Harris assumes office, she will likely continue Biden’s policies, favouring multilateral cooperation and further US participation in international trade organisations.

 

A re-entry into the CPTPP under her administration would benefit Vietnam, a member of the trade pact, by boosting exports.

 

Certain sectors in Vietnam may experience varying degrees of impact post-election. Harris’s policies would likely result in minimal disruption, but Trump’s stance could produce mixed effects.

 

For example, industrial real estate could gain from redirected foreign direct investment (FDI) away from China, while the oil and gas sector might benefit from Trump’s support for fossil fuel development.

 

However, textile, fisheries, electronics and furniture sectors, while potentially gaining from US shifts from Chinese goods, may face higher import tariffs when entering the US market.

 

Generally, the election outcome may have limited direct effects on Vietnam’s stock market. Nonetheless, with the VN-Index typically correlating with US stock movements, there could be slight short-term impacts. — VNS