Post-Election Focus Shifts to Policy Wrestling
US midterm election results are gradually becoming clear, with Democrats performing better than expected. Trump quickly signaled willingness to cooperate with Democrats, defusing extreme scenarios of expanding election disputes, and market focus has also shifted from election results to policy and industry impact. KGI Bank's Wealth Management Department believes that under a framework where major legislation remains checked by executive power, policy wrestling in Washington may intensify, cross-party negotiations will become more difficult, and executive-legislative interaction will shape the direction of future policy, warranting continued observation. The bank also cautioned to watch whether Trump leans toward shifting focus and increasing involvement in international affairs, with related moves potentially spilling over to global market sentiment and risk appetite.
Tech Regulation Becomes a New Industry Variable
On the industry front, issues such as AI regulation, antitrust and data centers will become new variables for the tech industry. KGI Bank points out that the direction and enforcement intensity of related policy discussions could affect large tech companies' operating costs, business expansion and investment pace, in turn affecting market views on tech stock valuations and volatility. While election effects may amplify short-term volatility in tech stocks, they will not change the long-term AI development trend, as AI is already a symbol of national strength, and neither Democrats nor Republicans will stand by while other powers overtake them, with the direction of long-term investment expected to continue.
Focus on Leaders Paired With Defensive Stocks
For equity allocation, KGI Bank recommends focusing on tech leaders with solid earnings and lower regulatory exposure to reduce policy uncertainty for portfolios, paired with defensive sectors such as healthcare, consumer and power-related utilities to enhance portfolio resilience. Through balancing growth and defense with moderate industry diversification, investors stand a better chance of maintaining a steady pace amid post-election volatility, avoiding excessive concentration in a single group, and shifting focus from betting on elections to fundamentals and asset allocation.
Bond and Currency Positioning With Balanced Stocks and Bonds
Bonds have benefited from cooling fiscal expansion expectations, with the 10-year US Treasury yield falling back to around 4.9%. With yields still relatively high, KGI Bank recommends adding medium- to long-tenor investment-grade bonds in tranches to capture income opportunities, while managing duration and credit quality. The dollar is soft and consolidating in the short term, with the dollar index expected to fluctuate in a range of 100 to 103. Overall, the post-election investment theme is shifting from betting on elections to fundamentals and asset allocation, with balanced stocks and bonds and industry diversification offering a better chance to capture next-stage opportunities amid volatility. Investing involves risks; please read the prospectus carefully before subscribing, and establish correct investment concepts to reduce the risk of losses.