Global investors in Asia are sticking with bets on China's recovery and holding off on major portfolio changes as early results show a tight US presidential election.
President Donald Trump holds a narrow lead in the battleground state of Florida, keeping open a path to the White House, which has upended expectations of a Joe Biden landslide.
"I don't think you'd be buying anything if the result's uncertain, because you have a binary outcome," said Matt Sherwood, head of investment strategy at Perpetual in Sydney, which manages A$29 billion ($21 billion) in assets.
"And if you start positioning your portfolio towards one outcome, then you could get your portfolio on the wrong foot."
For weeks, market moves had indicated investors were betting on a "Blue Wave" by which Biden wins the White House and Democrats control both houses of Congress.
That was expected to bring big stimulus spending along with higher yields on the government debt to pay for it, while foreign investors reckoned on freer trade and a weaker dollar directing capital to emerging markets.
Yet as results came in during Asian trade on Wednesday, bonds rallied and the dollar soared amid the uncertainty. Fund managers outside the United States, meanwhile, said they were sticking with investments that could withstand any electoral outcome.
"Should the election result become highly contentious, leading to notable market weaknesses, we are buyers rather than sellers," said James Leung, head of multi-asset, Asia Pacific, at global fund manager Barings.
"Asia has also been our preferred region before the election and the outcome of such should not materially alter the region's economic recovery. We remain constructive on the region on a medium-term outlook."
Asia's equity markets were steady or gainers on Wednesday, though most currencies fell against the rising dollar.
Asia Bets Stay
China is seen as particularly sensitive to the election outcome because Trump is viewed as far more likely to set off new and unpredictable confrontations with the world's second-largest economy.
The yuan sold off sharply as Trump's chances appeared to improve through Asia's trading day, though money managers invested in China did not expect the turbulence to last.
"Once the dust settles ... the market will go back to focusing on the long-term implications of the winner's policies," said Lei Wang, portfolio manager at Thornburg Investment Management in New Mexico.
"Chinese equities and bonds will likely continue to attract interest from overseas investors ... Chinese consumers and exports, the two pillars to China's economic growth engine, are intact."
Indeed, that has put a solid footing under company earnings and pushed China's blue chip index up about 16% this year compared to a 1.4% drop for world stocks more broadly - something investors think has further to run.
"We're not trying to trade the election, it's too difficult," said Vikas Pershad, a Singapore-based fund manager at M&G Investments.
"The US share of (global) GDP has very steadily fallen (in my lifetime). Where has it gone? It has come to Asia. I don't think that will change."