Newsflash | Trump Tests Positive for COVID-19
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05 October 2020
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Trump has tested positive for COVID-19. The two questions are whether Trump will recover in time to contest in the November presidential election, and if he wins the election, will he be healthy enough to serve the entire second presidential term.
Implication on US Presidency

If Trump is unable to contest the upcoming elections, the Republican party will have to select another candidate to contest in the presidential election. If Trump wins the presidential election but does not serve the entire second term, his Vice President, Mike Pence, will succeed as the President.

Although Trump is in the high-risk age group, we should not be too quick to assume the worst for Trump’s health. Estimates of mortality rate for his age group is between 5 - 15%. That implies that Trump is more likely than not to overcome COVID-19.

Impact On Funds’ Stock Positions
 

The dynamics that affect US stocks including potential tax hikes, minimum wage hikes and infrastructure spending will not materially change if Trump passes away because his replacement is likely to maintain similar Republican policies.

How these dynamics play out will depend on which party wins the November elections; not who represent these parties. As such, today’s news that Trump tested positive for COVID-19 will not significantly affect our investment decisions.

The same can be said for our Asian stock positions. If a Trump replacement wins the Presidential election, he/she is likely to maintain the tariffs imposed by Trump and remain untrusting of China.

If Biden wins the presidential election, US stocks will see modestly higher tax rates but that will be offset by higher US infrastructure spending and temporarily lower risk of a trade war. A Biden presidency may be positive for the Asian stock markets. Biden prides himself as one who respects international laws. Considering that the World Trade Organization has recently ruled Trump’s China tariff as illegal, Biden may reduce/remove tariffs on China imports.

Portfolio Positioning

For the investment team, our key focus remains in selecting stocks with strong long-term fundamentals that can adapt to changes in government policies. Staying invested in these good companies, in spite of political changes, has generally worked well over the long term

Disclaimer
This article has been prepared by AHAM Asset Management Berhad (“AHAM Capital”) (formerly known as Affin Hwang Asset Management Berhad) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to AHAM Capital and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of AHAM Capital.

The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, AHAM Capital makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions.

As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product.

AHAM Capital is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers.

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