Trump wins big! How to deploy investments?

In the early hours of November 6th local time in the United States, Republican presidential candidate Donald Trump announced that he won the 2024 presidential election. Due to the election effect, the 'Trump trade' has taken over major asset classes, with S&P 500 index futures rising 2%, the US dollar and US bond yields increasing, Bitcoin once surpassing $75,000, reaching a historic high!

Trump's policy proposals clearly reflect a conservative stance, emphasizing 'America First,' implementing trade protectionism, strict immigration restrictions, tax cuts, relaxed industry regulation, advocating for the vigorous development of traditional energy, and considering climate change as a 'hoax'.

With Trump returning to the White House, industries such as infrastructure, traditional energy, finance, and pharmaceuticals may benefit, but his policies may also lead to a resurgence in inflation, thereby dragging down market performance.

US stocks

Trump promised to cut corporate taxes and reduce regulations, and may appoint a dovish Chair of the Federal Reserve. His victory is expected to be bullish for the financial industry, including banks and asset management companies, and help boost the US stock market in the short term.

From historical records, presidential elections have a certain impact on the monthly performance of US stocks. As the election voting day approaches, market volatility usually increases, leading to weaker stock market performance; however, after the election results are announced, market uncertainty dissipates, and volatility gradually declines, giving the US stock market a chance to rebound.

According to Bank of America's statistics, US stocks tend to decline in October before the election and then rebound in November and December after the election. In fact, many analysts have long predicted that regardless of who wins the presidential election, the upward trend in US stocks will continue until the end of 2024. In the week before the vote, the S&P 500 index fell by 1.4%, which may be a signal for a bullish stock market in the following month.

If you are bullish on the future of US stocks, investing in the S&P 500 index can effectively diversify individual stock and industry risks, and in the long run, it is also a tool to outpace inflation. Tracking the S&P 500 index, large ETFs with good liquidity and low fees are $Vanguard S&P 500 ETF(VOO.US)$ 、  $SPDR S&P 500 ETF(SPY.US)$ 、  $iShares Core S&P 500 ETF(IVV.US)$Rumble (RUM.US)

Bitcoin

Donald Trump is undoubtedly a supporter of cryptocurrency, and the surge in Bitcoin is seen as one of the key directions of the 'Trump trade.' Trump vows that if he returns to the White House, he will make the United States the global capital of cryptocurrency, establish a strategic Bitcoin reserve, and appoint regulators who love digital assets, indicating that he is the most friendly candidate to this industry.

Influenced by the election, Bitcoin's price once broke through $75,000 on election day, rising more than 8%, setting a new all-time high.

In the US stock market, companies related to cryptocurrency mainly include three: the world's largest cryptocurrency exchange platform$Coinbase(COIN.US)$ and the world's largest mining company$MARA Holdings(MARA.US)$ One of the companies that holds the most Bitcoin.$MicroStrategy(MSTR.US)$

In addition, investors can also track the price trends of cryptocurrencies such as Bitcoin through cryptocurrency ETFs, which can be classified into cryptocurrency spot ETFs, cryptocurrency futures ETFs, and ETFs related to cryptocurrency stocks.

Donald Trump stocks

One of the themes of the market speculation this year is the 'Donald Trump concept stocks', with the opportunity for related targets to experience a new round of speculation following Trump's election.

Among them,$Trump Media & Technology(DJT.US)$ Considered to be the most genuine 'Donald Trump concept stocks'. DJT is the parent company of the well-known 'Truth Social', with Trump holding nearly 60% of the shares. Whenever the possibility of Trump winning increases, DJT often experiences a strong upward trend. Since the end of September, DJT has rebounded strongly, with the stock price soaring from less than $12 to close to $55, with a peak increase of over 360%.

Among the 'Big Seven' in the US stock market,$Tesla(TSLA.US)$ Tesla's CEO Musk is one of the biggest supporters of Donald Trump, having donated nearly $75 million in campaign funds. Trump has also promised that if elected, he will appoint Musk as the chairman of the government efficiency committee. As the election leans towards Trump, Tesla's stock price soared 12% in after-hours trading!

In addition, stocks closely related to Donald Trump include $Rumble(RUM.US)$ and $Phunware(PHUN.US)$ . Rumble, similar to DJT in nature, is a social platform gathering conservative individuals, providing video hosting and streaming services for DJT. In addition, Trump's campaign partner and Vice President Pence is also a shareholder of RUM. PHUN provided mobile app development and data analysis services for Trump's 2020 presidential campaign.

According to Trump's governing philosophy, here are the sectors and targets benefiting from the 'Donald Trump Trade' policy for investors:

USD and US Treasury Bonds

A Trump victory could mean a 'Strong Dollar Storm' for the market. Forex traders anticipate Trump will implement trade protectionist policies, including raising import tariffs to support US manufacturing. Additionally, Trump's repeated emphasis on tax cuts will stimulate inflation, reduce the Fed's room for interest rate cuts, thereby pushing up the US dollar and US bond yields.

Morgan Stanley expects that if the Republicans win, the US dollar will strengthen, and the exchange rates of the USD against the Euro, Renminbi, and other currencies possibly affected by tariffs will also rise.

Bond traders believe that the Republican Party's major victory poses a "clear threat" to bond buyers. With the Republicans in control and the Congress aligned, Trump will push for tax cuts and tariff plans, increase the fiscal deficit, and usher in an era of inflation. This will raise the yield on 10-year U.S. Treasuries, and bond prices may further decline.

In the US bond ETFs, the larger-scale $Vanguard Total Bond Market ETF(BND.US)$ 、  $iShares Core US Aggregate Bond ETF(AGG.US)$ and $iShares 20+ Year Treasury Bond ETF(TLT.US)$ have both fallen to three-month lows, while the US Dollar Index has once again broken through 105 after four months.