BPI sees US election results to push emerging markets to pre-pandemic levels

BPI emerging markets
BPI Securities Corporation President Haj Narvaez foresees President-elect Joe Biden increasing government stimulus with infrastructure and continued spending on renewable energy, including solar and wind.

BPI Securities Corporation (BSC), the trading arm of the Bank of the Philippine Islands, sees the current win of US President-elect Joe Biden pushing the MSCI Emerging Markets (EM) Index closer to pre-pandemic levels, especially benefiting the renewable energy sector.

“A Biden presidency would be marked by reinvestment in domestic manufacturing and technology, a less adversarial stance with China, and a strong focus on environmentally-friendly solutions,” said BPI Securities Corporation President Haj Narvaez.

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He foresees President-elect Biden increasing government stimulus with infrastructure and continued spending on renewable energy, including solar and wind. “And this should be good for companies in the construction, infrastructure and energy space,” he said.

According to Mr. Narvaez, this possible economic move will also benefit pockets of the Philippine market, as the future of the country’s power sector is looking a lot greener over the medium term.

“First Gen Corporation has positive tailwinds of late, as the Philippine government said that they will be against the construction of new coal power plants, moving forward. You should also keep an eye out on AC Energy. Most of their portfolio now is renewable energy. My estimate is that their exposure to renewable now is at 75%,” he said.

“The future of Philippine power is looking a lot cleaner over the medium term. We also see banks potentially increasing their exposure to so-called green energy plants. It’s a theme that will probably play out in the next few months. That’s some market exposure that you might want to get yourself into,” he said.

Another potential positive for emerging markets is the differing approach of the Trump administration versus President-elect Biden, as Trump was seen by many analysts as more adversarial against China and other emerging markets, whereas Biden might take a more diplomatic approach. President-elect Biden might also seek to rebuild coalitions with traditional allies in Europe.

“I would expect the tone will change a little, based on Biden’s extensive experience in foreign affairs. He will probably try to have a peaceful and calmer way of approaching other countries, such as China and those in the EU. We are not saying this trade war will end, in all likelihood it will continue, but it seems like there will be some calming down of the tension between the US and China.”

BPI Securities Corporation President Haj Narvaez earlier stated it expects the Philippine business climate to normalize in 2021.

Meantime, Philippine businesses are benefitting from BPI’s digital financial solutions.

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