Trump win expected to trigger more China stimulus- JPMorgan

Investing.com– A Donald Trump victory in the 2024 presidential election is expected to trigger a sell-off in Chinese stocks, potentially drawing out more fiscal stimulus from Beijing, JPMorgan said in a note. 

Trump has maintained a strong rhetoric against China, vowing to impose steep trade tariffs against the country if elected. Such a scenario is expected to herald more economic pressure on Beijing, potentially drawing out more supportive measures from the government. 

“A Trump 2.0 scenario would bring a more unrestrained Trump, with increased use of tariffs and policies to “escalate to de-escalate,” JPM analysts wrote in a note, adding that an initial reaction would likely be a market sell-off, with China also expected to impose retaliatory measures. 

A Trump victory was likely to invite more stimulus from Beijing to stabilize local markets, increase demand, and improve Chinese self-sufficiency, JPM said. The bank recommended China Galaxy Securities (SS:601881) and Semiconductor Manufacturing International Corp (HK:0981) as its top picks for such a scenario.

JPM noted that the scenario of a Kamala Harris victory was likely to boost risk appetite for China, and that export-oriented stocks were the most likely to gain. The bank said Qingdao Haier Co Ltd (SS:600690) and Midea Group Co Ltd (SZ:000333) were its top picks for such a scenario.

Trump and Harris are locked into a tight race, with voting set to begin later on Tuesday. 

Focus this week is also on a meeting of the Standing Committee of China’s National People’s Congress- the country’s top political body. The NPC is widely expected to outline plans for more fiscal spending during the meeting, with analysts seeing an at least 10 trillion yuan ($1.4 trillion) figure in new spending. 

Beijing had announced a string of monetary and fiscal stimulus measures over the past month, but was yet to offer more details on their planned scale and timing.