Trump Elected 47th President of the US … Some Implications for Financial Markets

TRUMP ELECTED 47TH PRESIDENT OF THE US ………. SOME IMPLICATIONS FOR FINANCIAL MARKETS

The election outcome is perceived as a net negative for Emerging Markets, most especially China.

Trumps stated intention is to:

• Impose significant tariffs on Chinese goods.

• Extend US personal income tax breaks that are scheduled to expire in 2025.

• Boost US economic growth, particularly industrial growth.

• Be less supportive of global initiatives that do not benefit the US.

In the immediate aftermath of the election, the US:

• Bond market weakened

• Equity market strengthened

• Dollar strengthened

In the medium term the US and global economy is more uncertain:

• Trump’s policies could escalate a more pronounced trade war between the US and China.

• Trump’s victory strengthens the role of BRICs and the desire to move away from the USD as a reserve currency.

• The US may experience a resurgence in inflation as a result of higher import duties.

The Rand lost 1.6% against the USD on the election results, trading at R17.72/USD. It has since strengthened to R17.42/USD.

Source: Analytics Consulting