October 30, 2020

A Biden win could spur a knee-jerk 5% pullback in the stock market, but investors should seize the buying opportunity, Credit Suisse strategist says

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Suresh Tantia , Credit Suisse
  • Suresh Tantia of Credit Suisse told CNBC on Thursday that a Joe Biden win could spur a “knee-jerk” 5% pullback in the stock market given the Democratic nominee’s stance on corporate taxes. 
  • However, this pullback will be a buying opportunity for investors because long-term Fed support will continue to drive markets after the election, said the senior investment strategist. 
  • Tantia said investors should seek out stocks in Asian markets as they are cheaper than US stocks and have strong earnings.

Suresh Tantia, a Credit Suisse senior investment strategist, told CNBC on Thursday that a Joe Biden win could cause the stock market to see a “knee-jerk” reaction in the form of a 5% pullback, but this could be a buying opportunity for investors.

The investment strategist said that the pullback may occur with a Biden win because of his proposal to raise corporate taxes. However, the Federal Reserve will drive the markets in the longer term, so investors should view a pullback as a time to buy stocks at a discount. 

“The central bank support is not going anywhere. The Fed is going to keep rates lower for longer, similar to other central banks, so as they are injecting liquidity in markets, I think equity markets will bounce back,” Tantia said. “So we would want to use that pullback as an opportunity to buy into equities.”

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Tantia also cited “encouraging” macroeconomic data related to countries in Asia and suggested investors seek out stocks there instead of the somewhat expensive stocks in the US.

“Given the election risk in the US and more expensive valuation, I think the Asian markets look more interesting. Strong economic recovery, strong earnings, and much cheaper valuation compared to the US equity market,” the strategist said.