Investors favour a Republican clean sweep, but fear if Democrats flip the Senate

Survation has conducted a global sentiment survey of investors responsible for assets in US markets, ahead of November’s US elections for the Presidency, Senate, and House of Representatives. We surveyed investor views on the likely outcomes of the upcoming elections, and the likely impacts of a range of potential outcomes: combinations of Democratic and Republican control of the White House and Congress.

91 investors were interviewed online across equities and fixed income from 88 companies in 16 countries across the Americas, Asia, and EMEA regions representing $3tn Assets Under Management (AUM) in US markets.  Fieldwork was conducted 7 – 21 September 2020.

Likely outcomes

60% of investors surveyed believe Joe Biden will win the Presidential race, while 40% believe Donald Trump will win a second term.

Views are more split on the question of who will control the Senate after the 2020 elections, with 49% of investors predicting the Republicans will retain the upper house, while 43% expect the Democrats to gain the Senate. 9% have suggested that the elections will result in a tie – in which case, the elected Vice President would hold the casting vote in the Senate.

There is far less ambiguity for the House of Representatives – 9 in 10 investors (89%) expect the Democrats to retain control of the House, compared to 11% predicting a Republican victory.

Perceived Impacts of outcomes

A Republican clean sweep has the highest net positive impact rating among investors when we asked about the impact of various combinations of party control on the US Dollar Index (+19%), US stock market (+71%), and US equities (+43%)

According to investors, a Democrat clean sweep of the White House and Congress would have the strongest net negative impact on the Dollar Index (-55%), stock market (-46%), and equity market (-33%)

Looking at the impact on major industries, investors would consider a Republican clean sweep to be the most positive outcome for most industries (between +17% and +70%) – apart from healthcare (+5).

A Democratic clean sweep would be expected to have strong net negative impacts on energy (-67%) and financials (-54%), with no net positive impact expected in any sector

We also asked about prospective impacts on companies considered to be in the ESG sector (environment, social and governance) – here, the Republican sweep net impact is considered to be -54%.

In contrast, a Democratic clean sweep had a predicted ESG net impact of +54%.

Survation is tracking for clients the 2020 US Elections with regular national polling and statistical modelling. To find out more and to gain access to this resource, contact Damian Lyons Lowe at damian.lyonslowe@survation.com.

The Financial Times has reported on the investor survey.

Data

We sent email invitations to complete the survey to prospective respondents. The sampled population comprises financial services professionals worldwide who are responsible for the management or analysis of portfolios in the United States. Data are weighted according to the profile of this population, by respondent’s geographical location, asset class(es) managed, and company’s assets under management. Weighting targets are derived from the IHS Markit global database of financial services professionals.

The research summary document is available here. Data tables can be found here.

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