Last week's US presidential elections have resulted in a win for Democratic candidate Joe Biden. Mr. Biden was, of course, running against the incumbent Republican President Donald Trump. After an initially unclear election result, Biden was declared the eventual winner on Sunday (our time), and has since assumed the title of 'President-elect'.
How has the market reacted to this news? Very well, if the numbers are anything to go by.
Since 4 November (the date of the election in Australia), the S&P/ASX 200 Index (ASX: XJO) is up 6.1%. That's pretty close to the long-term average the ASX 200 delivers in an entire year (according to State Street Global Advisors, the ASX 200 has returned an average of 7.53% per annum since 2001). And since Biden's win was called, the ASX 200 is up 4.4%.
So clearly the US election was a major market-moving force. But how exactly have ASX investors really responded to the changing of the guard at the White House?
Reporting in the Australian Financial Review (AFR) this week answers that question.
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Biden win leads investors to China… and cannabis
Cannabis and China: not a combination of words we see too often. But that's where the AFR tells us investors are parking their money at the dawn of the Biden administration.
According to the AFR article, analysis of trading activity on poplar brokering platform Stake over the past week or so has come up with some interesting results. Chief amongst those is that investors are suddenly far more bullish on Chinese companies (at least those listed in the US).
Stake lists Chinese electric car maker Nio Inc (NYSE: NIO) as the most popular share its investors have been buying in the wake of Biden's win. That displaces long-running favourite Tesla Inc (NASDAQ: TSLA).
It also notes that other Chinese companies like e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA) and electric vehicle company Xpeng Motors (NYSE: XPEV) were also in Stake investors' 'top 5' shares.
Why China? Well, according to the AFR article, investors are likely to be "reacting positively to a potential end to the so-called trade war and the Trump administration's tough stance on China."
Stake investors were also giving the green light to cannabis stocks. Canadian marijuana company Aurora Cannabis Inc (NYSE: ACB) was reportedly the second-most popular share on Stake in the wake of Biden's win, after multiple US states also legalised recreational cannabis in last week's elections. According to the AFR article, Biden's attitude towards the sector is also much more lenient than Trump's.
It will be interesting to see whether these trends hold up over the coming weeks and months, or if this surge in interest in cannabis and Chinese companies is more of a flash in the pan.
