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Asian Investors Breathe Sigh of Relief as Obama Wins

Asian stocks quickly reversed their downtrend on Wednesday after news of U.S. President Barack Obama's re-election removed a major source of uncertainty for regional markets. However, strategists told CNBC they were wary on how long the relief among investors would last.

"The reaction of Asian markets reflects a sense of relief, rather than cheer. With more certainty, we can get on with business more seriously," Justin Harper, market strategist at IG Markets, told CNBC.

Markets in Japan, South Korea, China and Hong Kong, which were trading in negative territory in the morning session, edged higher following the announcement of Obama's victory. However, two of those markets, Japan and China, failed to sustain those gains, closing the day flat.

"Gains have been limited because we are back to square one regarding the impending 'fiscal cliff' and how we are going to deal with that when it happens next year," Harper said, adding that Greece's vote on austerity measures and the leadership transition in China could bring about additional uncertainty in the near-term.

Michael Yoshikami, CEO and founder of DWM Investment Committee, said while increased clarity on the U.S. political front may lead investors to consider adding risk to their portfolios, he also warned of an "immediate pivot" to concerns over the "fiscal cliff."

"There will be a very brief pause from uncertainty and this new concern will take hold that will likely cause significant volatility for equity markets."

"Fiscal cliff" is the term used to describe a series of tax hikes and spending cuts that will take place in January if Congress fails to reach deficit-reduction targets.

Expect More QE

According to Mohammed Apabhai, head of Asia trading strategy at Citi, among the most positive aspects of an Obama victory is that investors can expect a continuation of easy monetary conditions and quantitative easing, which has been a vital driver of the equity markets.

"Political consensus between the Fed and White House might not have been as good if Romney had been president," he said.

Romney indicated that if he were elected president, he would not reappoint Federal Reserve Chairman Ben Bernanke for a third term, which analysts said would have resulted in the appointment of a less dovish Fed Chairman.

A Breather on China

In addition, with the election campaign now over, Yoshikami said there will be less posturing between the United States and China, particularly on the trade front.

(Read More: America Votes: Scenes From the Election)

"The current administration has clearly embarked on a negotiated solution to the disagreements with China and I expect this will continue going forward," he said.

Mark Matthews, head of research Asia at Bank Julius Baer said China - which was a frequent target of blame for U.S. employment conditions during election campaigning - may scale back on the pace of appreciation in the yuan now that the elections have been concluded. The yuan has risen 2 percent against the U.S. dollar in the last three months.

Obama is expected to take a less aggressive stance on China, compared to Romney, who pledged to label the mainland a currency manipulator on his first day in office.

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