By Tom Westbrook and Satawasin Staporncharnchai
SINGAPORE/BANGKOK (Reuters) - Asia's retail traders are trimming exposure to China before Tuesday's U.S. election, lifting short bets on U.S. stocks and keeping cash on hand, brokerages say, as even some of the most risk-tolerant investors turn cautious.
Novices, who took up trading during lockdowns, have led aggressive buying this year when many Wall Street advisors urged caution.
UBS analysts reckon, at least in Southeast Asia, that they are now a big enough force to move markets. Their brokers say they are getting ready for short-term risks, despite a consensus favouring a Joe Biden victory and a market rally.
"People are positioning themselves according to what they believe an outcome may be," said Chris Brankin, chief executive at TD Ameritrade (NASDAQ:AMTD) in Singapore, who noted a "hint of skepticism" among his clients around polls putting Biden ahead.
"They're not mass exiting positions ... it's more of a risk pause," he said. "And all eyes are on Tuesday."
He said the chance of a Donald Trump win was partly reflected in a small reduction of exposure to Chinese companies and buying of oil major Exxon Mobil Corp (N:XOM).
Chinese companies are considered vulnerable to Sino-U.S. tension if the less-predictable Trump is re-elected. Energy companies could benefit from lower taxes.
Other brokers reported similar caution. In Australia, retail broker CommSec said there had been recent buying of Betashares' BEAR ETF (AX:BEAR), which gains when stocks fall, and of options protecting against falls. IG Markets said clients were long U.S. dollars in case a contested outcome caused market turmoil.
"Right now, I'm holding 30% in stocks and the rest in cash ready for investment," said Watchara Kaewsawang, a large Thai investor. "I've delayed my investment to wait and see on the U.S. elections and our home politics."
All that dry powder could mean that Asia's small investors are ready to swoop if uncertainty clears.
"This (risk reduction) had started probably late September, and is ongoing," said Adam Reynolds, Asia-Pacific CEO of Saxo Capital Markets in Singapore. "I imagine that there will be a rush back in if we get a decisive election result."