There are only a few days left until the U.S. election, and whether Trump or Harris will win is being closely watched, not just in the U.S. but worldwide. Why? Because this is not just about changing a leader in the U.S.; the understanding king and Harris represent two completely divided camps in the U.S. The things they will do once in office can be said to be worlds apart. No matter if you are in the U.S., Europe, Japan, or China, whether you are in business or investing, the outcome of this election could directly impact you. For instance, in our A-share market, there have been concerns that if the understanding king returns to power, will it collapse the A-shares like in 2018, potentially falling below 2600 points? Please like and follow, and we will analyze it logically.
First, let’s take a look at how likely the understanding king is to win. According to the polling results, the support rates for Harris and the understanding king are already neck and neck.
But the U.S. is quite interesting; the polling organizations are pro-Democratic, so their polls tend to favor Harris, which makes them less reliable. Instead, the odds on betting platforms, since they are backed by real money, are actually more reliable. So what are the current odds? The understanding king's winning probability exceeds 60%.
So everyone should search online; many American billionaires and politicians are publicly jumping to oppose, clearly supporting the understanding king, which shows who has a greater chance of winning.
So if that’s the case, if the understanding king really wins, how much impact will it have on us? In fact, the understanding king’s policies mainly consist of a few elements: increasing tariffs, reducing corporate taxes, exempting small business taxes, promoting industrial return, and expelling illegal immigrants, among others.
With these few axes, the first certainty is: the prices and inflation in the United States are likely to rise again. For example, with increased tariffs, imported goods become more expensive, and the inflation rate rises. Additionally, expelling illegal immigrants means fewer workers, which leads to higher wages, still pointing towards inflation. As for the return of industries, the production costs in the U.S. are higher, so the products initially produced will definitely be much more expensive than those from other countries. All of this points to the fact that inflation in the U.S. will be pushed up. Once inflation rises, the Federal Reserve will likely have to continue to slow down interest rate cuts or even restart rate hikes. This is the first point.
So what is the second certainty? It is our exports, especially products exported to the U.S., which are likely to be significantly affected. After all, the understanding king has been shouting about increasing tariffs, which will definitely have negative impacts.
Thirdly, the understanding king not only wants to raise tariffs against us but also against the entire world, which could make the global economy worse and still impact our exports. If exports are affected, coupled with the Federal Reserve delaying interest rate cuts or even raising rates again, could this turn into a shock for A-shares that is no less than that of 2018? Keep in mind that at that time, A-shares fell from 3587 points all the way down to 2440 points.
However, this time it is highly likely that it won’t happen. Why? Because this time we are prepared.
In 2018, we did not expect the understanding king to really disregard international rules, to undermine his own free trade reputation, and to raise the cost of living for his own people just to increase our tariffs. Therefore, we were unprepared and very passive, and we did not know how long this trade war would last or how big its impact would be. At that time, we even thought that as long as we talked more, we could resolve the issue, so we did not implement many strong stimulus measures.
But this time is different; the National People's Congress Standing Committee, which was originally scheduled for mid to late October, has now announced it will be held from November 4th to 8th. What does this timing coincide with? November 5th, which is the U.S. election. By the noon of November 7th here, we will likely know the election results, and the Federal Reserve's meeting will also yield results in the early hours of November 8th for us. Therefore, we are likely to have already formulated two plans: Plan A, if the understanding king does not win, is for fiscal and monetary policies to gradually come out. But if the understanding king really wins, then Plan B, a major policy may need to be announced. With the support of fiscal and monetary policies, along with our central bank's unlimited ammunition supporting the stock market, you might ask, how much can A-shares drop? Where can they really go?