"Nobody Knows Who Will Win"... Investors Secure Cash Instead of Predicting US Election Results

UBS Survey of 1,000 Investors: 36% Say "Increase Cash Allocation in Portfolio"
Market Focuses on Possibility of Democratic Senate Victory... Gauging Direction of Stimulus Measures

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] With the U.S. presidential and senatorial elections just one day away, investors are finding it difficult to predict the outcome and are operating their portfolios defensively by increasing cash holdings. Based on experiences from Donald Trump's surprise victory in 2016 and the Brexit referendum, they are cautious in their comments except to note that the election results will have an impact for years to come, closely monitoring the election trends.

According to the Wall Street Journal (WSJ) on the 1st (local time), Swiss investment bank UBS surveyed 1,000 investors holding investable assets of over $1 million, revealing that 63% are managing their portfolios defensively. Specifically, 36% of respondents increased their cash allocation, 30% adjusted their investment sectors, and 27% reported implementing protective measures.

This movement appears to stem from investors' expectations that the market could move significantly depending on the presidential election results. Particularly, uncertainty has increased as President Trump has hinted at the possibility of contesting the election if defeated. More than half of respondents (52%) anticipated that the stock market would plunge if disputes arise over the election outcome. Over half of all respondents indicated they would adjust their portfolios based on the election results.

In the market, amid the ongoing resurgence of COVID-19, additional economic stimulus measures are seen as essential to resolving the recession. Therefore, there is heightened interest in the Senate election in this U.S. election. Even if Democratic candidate Joe Biden, currently leading in polls, wins, if the Republicans control the Senate, passing future stimulus bills may prove difficult.

According to political analysis media RealClearPolitics, in this Senate election, Democrats are expected to secure 45 seats, Republicans 46 seats, with 9 seats being highly competitive. Currently, Republicans hold 53 seats, Democrats 45 seats, and 2 independents, with Republicans as the majority party.

Wall Street veteran investor Richard Bernstein said, "The biggest issue is not who wins the presidency, but who wins the Senate election." Ed Campbell, QMA fund manager, stated, "(If Biden wins) the Republicans, as the Senate majority, will strongly oppose passing large-scale stimulus bills," predicting that Biden winning without Democrats securing the Senate majority would be the worst-case scenario in the short term.

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