A VICTORY by Democratic candidate Joe Biden over President Donald Trump in the US election will be seen as positive for Asia equities, said DBS Group Research on Tuesday.

In a monthly strategy report, the research team noted that Mr Biden is likely to end the United States' trade war with the EU, and adopt a more open and negotiable approach with China with tariffs being reconsidered or removed.

This would be positive for Asia and especially Singapore, given the city-state's small and open economy, wrote analysts Yeo Kee Yan, Chung Wei Le and Janice Chua.

Companies that have production facilities in China and sales exposure to the US are some of those poised to benefit from a Biden victory, the DBS analysts said, citing Valuetronics and Hi-P as Singapore-listed companies with some 30-50 per cent revenue exposure to the US.

The easing of US-China trade tensions will also be positive for China's recovery and should lift sentiment for China-related stocks on the Singapore bourse such as China Aviation Oil (CAO) and Hutchison Port Holdings Trust (HPHT), the analysts added.

They highlighted that CAO derives 60-65 per cent of profits from the Shanghai international airport's aviation fuel services, which will benefit from a strong rebound in domestic air travel. HPHT, meanwhile, gets some 90 per cent of its profits from Yantian Port, where 30 per cent of the business are exports to the US.

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DBS is not alone in seeing the positive impact on Asian equities arising from a Biden win.

Bloomberg reported on Tuesday that BlackRock had upgraded Asia ex-Japan and emerging market equities to overweight on expectations of a Democratic sweep - also known as a Blue Wave, where Mr Biden wins the the election and the Democrats take both houses of Congress. BlackRock also cited Asian economies' greater success in controlling the Covid-19 outbreak compared to the West, in upping its call on regional stocks.

Likewise, JPMorgan & Co said last Friday that overweighting emerging Asian equities and currencies was the safest trade going into the polls, provided investors believe Mr Biden will win.

The DBS analysts said in their research note on Tuesday that a Blue Wave would be a bonus and preferred, as it should lead to the smooth passage of a second US fiscal stimulus.

On the other hand, should Mr Trump win a second term, there may be more uncertainty, the analysts noted. They pointed to risks of worsening US-China trade tensions and the acceleration of manufacturing relocations out of China.

DBS views one of the key beneficiaries of a second term for Mr Trump to be oil and gas players with exposure in the US.

Another term for the president may be positive for Singapore-listed oil service providers in the US, such as CSE Global, the research team said, adding that Keppel Corp could see increased demand for rigs and vessels with a deregulation of the energy industry and a lift to drilling activities.

The analysts urged investors to stay focused on the positives in the Singapore market, beyond the immediate-term weakness amid lockdowns in Europe and surging US Covid-19 cases. They said the current market selloff will likely end above the March lows, with technical support for the Straits Times Index at 2,380 and 2,300 points.

"Asia is on the recovery, led by China," the analysts wrote, adding that Singapore's gross domestic product has also passed its inflexion point and is set to register positive year-on-year growth in 2021.

And for travel stocks, it's "not all doom and gloom" either, said DBS, as investors can look towards developments in vaccine candidates, which are undergoing clinical trials and should have their outcomes known by the end of November to early December.

"A positive outcome will likely mark a recovery from major lows for travel-related stocks," the analysts said.

"The Singapore government's commitment to restoring air connectivity while guarding against Covid-19 will position our aviation and hospitality stocks as among the first to ride on the recovery in international travel once a vaccine is readily available."