- Political uncertainty remains a negative for markets going forward, according to a Monday note from Morgan Stanley.
- A survey by Morgan Stanley conducted in October showed that as many as 78% of investors expect stocks to decline in the first three months if a Democrat wins the presidential election.
- If Trump is reelected, only 16% of investors expect stocks would decline in the first three months of his second term.
- Read more on Business Insider.
Amid the coronavirus outbreak that sent stocks to the fastest correction since the Great Depression, political uncertainty remains a potential negative catalyst for markets, according to Morgan Stanley.
As many as 78% of 645 investors surveyed by Morgan Stanley from October 8-22 expect equities to decline in the first three months if a Democrat is elected president in November, according to a Monday note. Only 10% of investors say that they expect stocks to remain unchanged if a Democrat wins the White House, while 12% expect markets to rally.
On the flip side, only 16% expect stocks to decline in the first three months if President Trump wins reelection in 2020. As many as 35% expect that stocks would remain unchanged, and a whopping 49% said they expect that stocks would rally in the first few months if Trump wins a second term.
Morgan Stanley Research
“The closer we move to November, the more we expect market participants to discount potential changes to tax and regulatory regimes that may come as a result of the US elections,” Morgan Stanley equity strategist Michael Wilson wrote in a Monday note.
“At a minimum, we think the uncertainty associated with the election will act as a limiting factor on US business investment and the ability of the market multiples to expand, even in the absence of virus related concerns,” Wilson said.
Author: Carmen Reinicke