US Senator Barack Obama has been elected as the next president of the United States. Now comes the hard part of fixing the ailing US economy. The economic powerhouse is in recession, having been battered by the worst financial crisis in decades. The severity of this economic downturn can be mitigated by sound government policies, and high hopes are placed on the incoming president to revive the distraught economy, assist struggling households and boost business confidence.
Asia-Pacific stock markets opened stronger, following gains in the U.S. overnight. There were no major immediate reactions to the election outcome, possibly because markets across the region had already priced in the result based on recent polls. All major stock indexes maintained early gains after Barack Obama was confirmed as president-elect. The Hang Seng remains about 6% higher, the Nikkei up by more than 2%, while the ASX200 finished the day with a 3% rise. The president-elect’s choice of cabinet will attract strong attention across the Asia-Pacific. The continued elimination of political uncertainty in the U.S. and announcement of further stimulus measures will be welcomed by Asia-Pacific markets.
Governments and markets in Asia will closely watch the approach the incoming administration will take regarding regulation, notably of financial markets. Policymakers in Asia are tentatively supporting leaders in Europe calling for enhanced regulation. Another flash point is trade. President-elect Obama has at times sounded protectionist, and time will tell whether this will meaningfully impact the further development of trade links around the world.
Sherman Chan is an Economist with Moody's Economy.com based in the Sydney office. She is responsible for country analysis of China, Hong Kong, India and Vietnam. Her research interests also include sovereign wealth funds and development economics. Prior to joining Moody's Economy.com, Sherman was an analyst at the Australian Prudential Regulation Authority. She is also an alumnus of the Ronald Henderson Research Foundation. Sherman received her Bachelor of Commerce degree (Honours) in Economics from the University of New South Wales and she is currently undertaking a Ph.D. at the Social Policy Research Centre of the University of New South Wales.
(Sherman Chan, Economist, Moody’s Economy.com)
