Trump Tests Positive for COVID Ahead of US Presidential Election... What About the Stock Market?

SK Securities, Scenario-Based Outlook
"COVID-19, the Biggest Issue During the Remaining Election Period... Increased Likelihood of Stimulus Package Approval"

As COVID-19 Concerns Grow, 'Renewable Energy' Benefits from Biden Gain Momentum
If Sympathy Gains Strength, Tech and Infrastructure Sectors Show Promise

[Asia Economy Reporter Oh Ju-yeon] The global financial markets are shaking following the news that President Donald Trump and his wife Melania tested positive for COVID-19. On the 2nd (local time), Dow futures plunged more than 400 points, and Trump's election campaign has become impossible for at least two weeks, increasing uncertainty about the election outcome. Additionally, since Trump's self-quarantine ends on the 16th, it is uncertain whether the second TV debate scheduled for the 15th will take place. Although the situation is difficult to predict, SK Securities has organized possible scenarios for the future developments.

[Image source=Yonhap News]

Among the three scenarios presented by SK Securities on the 3rd, the first considers the possibility that Trump is unable to govern, raising the possibility of postponing the election.

According to the 25th Amendment to the U.S. Constitution, ratified in 1967, a president who is medically incapacitated can temporarily transfer power to the vice president and reclaim it once recovered. Therefore, if Trump cannot govern, Vice President Pence would take over, but the problem arises regarding the election.

Han Dae-hoon, a researcher at SK Securities, explained, "If Trump cannot run in the election, the situation becomes complicated. Since mail-in voting has already been conducted, it is too late to change the candidate. This is why the possibility of postponing the election is being raised."

The second scenario is that Trump recovers safely and sympathy for him grows.

Han said, "Since the national leader contracted COVID-19, there could be arguments to support the government’s governance efforts, and sympathy for Trump may gain momentum. In fact, British Prime Minister Boris Johnson’s approval ratings rose after his COVID-19 diagnosis," he analyzed.

This is considered the best-case scenario for Trump, who is trailing behind candidate Biden in approval ratings.

The third scenario is that Trump recovers, but criticism over the failure of COVID-19 prevention intensifies.

Han stated, "British Prime Minister Boris Johnson gained sympathy votes after contracting COVID-19 while trying to prevent the virus, but Trump did not. Instead, he planned to suppress the COVID-19 prevention failure through economic recovery. Therefore, a backlash could occur," he judged. He added, "If Trump returns healthy, COVID-19 is expected to become the biggest issue during the remaining election period."

Meanwhile, Trump's COVID-19 diagnosis is seen as increasing the likelihood of passing a U.S. economic stimulus package.

Han analyzed, "In a situation where Trump is already trailing Biden in approval ratings, disruptions to the election schedule have made Trump and the Republican Party desperate. They can no longer afford to be complacent in stimulus package negotiations amid stagnant approval ratings."

Han also said, "The greater the anxiety caused by Trump's COVID-19 diagnosis, the more sectors benefiting from Biden’s potential victory, led by renewable energy, will be favored. Conversely, if Trump recovers and arguments for supporting his governance and sympathy gain strength, tech and infrastructure sectors are expected to be promising."

This content was produced with the assistance of AI translation services.