JPMorgan says Biden’s stimulus plan is a ‘positive surprise’
Emerging markets in Asia may face challenges amid President-elect Joe Biden’s $ 1.9 trillion plan to tackle coronavirus, suggests James Sullivan, director of research for Asian stock markets excluding Japan at JPMorgan.
«Most investors were very positive about Asia and emerging markets compared to the US» even before the details of the latest bailout package were announced, he said James Sullivan (James Sullivan) on CNBC «Street Signs Asia» (Street (road) signs of Asia).
«We watched inflows to Asia for more than 18 consecutive weeks, excluding Japan, in the past two months», – he said, adding that «highly likely» (highly likely) that funds will start to flow from emerging markets in Asia back to the US as a result of the accelerated economic growth that should follow according to the plan Joe Biden.
On Thursday, Biden revealed details of his proposed package, titled «American Rescue Plan» (American Rescue Plan), which includes incentive measures to support families and companies until vaccines are widely available and available. The plan includes direct payments to American citizens as well as unemployment cash support.
Sullivan said JPMorgan had previously forecast a two percentage point drop in US GDP as a result of a lack of fiscal stimulus..
«We included in our forecast a $ 900 billion fiscal stimulus package, which led to a move from a 2% slowdown to 70 basis points towards an increase in relation to US GDP», – he said about the previous forecast.
Since Biden’s $ 1.9 trillion plan is currently more than double JPMorgan’s expectations, the analyst said it would become «positive surprise» for the market as well as for the general level of economic growth in the USA.
«Investor fund flows to Asia have been very intense over the past two months, perhaps we will start to see the opposite process.», – the analyst said. «I would say that at this stage we are about halfway through, judging by the bidding».
Sullivan predicts that China’s markets, which looked some of the best in the region in 2020, could be among the first to be hit by this shift..
«You will likely see the most active leaders of 2020 become funders.», – he said. «China will increasingly become the epicenter of this».