Three important events are taking place in November that could shape the financial markets and the economy for the remaining final quarter of 2020 and into early 2021. We discuss briefly all 3 events and, take our best shot to simplify the impact and the repercussion of US presidential elections outcome on domestic equities.

1. Budget 2021 – Malaysia’s budget is to be presented on Friday in parliament. It is dubbed as the government versus unity budget and whether this will get majority approval required. This is also seen by some quarters as PM Tan Sri Muhyiddin litmus test to continue leading the country. It will be an expansionary budget, for sure.

2. Lockdowns – Some states/districts in Malaysia have reverted to enhanced MCO as daily cases reach record high. Several European countries are in nationwide lockdowns to deal with yet another wave of Covid-19 infections.

3. Politics – the US presidential elections is on November 3. The polls have Joe Biden leading incumbent Donald Trump, but as previous 2016 showed, this is not a foregone conclusion. All said, having a unified US government would be more important than who will be the next president.

In order of priority, we think short term market performance will be influenced by Malaysian Budget 2021, followed by Covid-19 cases. The impact of the US presidential elections on the Malaysia stock market, depending on the outcome (divided versus unified), is a longer term issue, in our opinion.

Source: BIMB Securities Research - 3 Nov 2020