Chinese traders and asset management companies are wary of trading on the stock exchange due to the US sanctions. As the day of the election approaches, the situation becomes even tenser since its outcome will decide the future of the relationship between the United States and China.
Investors suggest that if current US President Donald Trump is re-elected the tensions between the top global economies will only mount. Meanwhile, if the Democratic candidate Joe Biden, who is more diplomatic on this matter, is elected president, the pressure on China could be reduced. In either case, uncertainty urges most stock funds to take precautions: the companies are currently revising their portfolios, excluding primarily shares of the Chinese companies that are traded on stock exchanges in the US and replacing them with the securities of Heng Seng companies listed on the Stock Exchange of Hong Kong. On top of that, forex market players fear that the possible re-election of Donald Trump may lead to a severe downfall of the renminbi. Currently, the yuan is trading near monthslong highs. There is a reason to believe that the currency spiked on the expectations of Biden's victory. However, the chances of both candidates are practically equal at the moment.
Consequently, traders as well as asset management companies are striving to insure possible risks using derivative financial instruments, mainly options and futures. Thus, the majority of private and institutional investors are focused on diversification of their investments.
