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Obama victory buoys investors


November 5, 2008

Obama victory buoys investors but economic crisis remains a threat
Barack Obama's convincing win in the US presidential election ends a source of uncertainty for global investors but does not change the grim realities
facing the world economy, reported Reuters.

Asian shares hit a three-week high and the dollar extended its gains after Obama captured the White House over Republican rival John McCain at a time when the world's biggest economy is likely in a recession.

That followed the biggest Election Day rally ever in US stocks, but many investors said Obama's victory didn't change their outlook for markets or for central banks to keep cutting interest rates around the world to support struggling economies.

Doug Kass, founder and president of hedge fund Seabreeze Partners Management, said the Wall Street rally was an "Obama bounce, not an Obama rally."

Investors have tracked the US election closely because of the winner's influence to shape rescue plans underway to cope with the worst financial calamity since the Great Depression.

Asian stocks rose for a seventh consecutive day to the highest in three weeks and US Treasury debt fell after Obama's victory was declared.

"Well, it can't be negative for markets. It's a vote for change and has to inject a degree of optimism that America can again reinvent itself," said Rob Henderson, head of market economics with National Australia Bank in Sydney.

Obama advocates a second economic stimulus package to revive the US economy. Valued at $175 billion, the plan would include funding for infrastructure and a round of tax rebates.

Any package like that would add to the $4 trillion that governments around the world have thrown at the financial crisis in the form of tax cuts, bank bailouts and other spending.

Earlier in Thailand, stocks are seen extending their rally on Wednesday, with Wall Street rising overnight, as investors waited for the election result.

"The U.S. election result is definitely something that dominates investors' minds around the world right now," Siam City Securities strategist Sukit Udomsirikul said.

 "With that in mind, we could see our market climbing up further, while other positive internal elements like falling inflation can support a good chance for a rate cut," he said, expecting the Bank of Thailand to cut rates by 25 basis points at its December 3 meeting.

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