ANN/THE STRAITS TIMES – The outcome of the United States (US) election is expected to ripple through global trade and finance over the coming months, with asset classes poised for potential shifts depending on the pace and intensity of President-elect Donald Trump’s policy rollouts.
Endowus Chief Advisory Officer Hugh Chung suggested a second Trump term may push inflation, interest rates, and the US dollar higher due to proposed tariffs. While stocks and cryptocurrencies initially rose in anticipation of Trump’s policies, markets are now pausing as questions linger over whether these promises will materialise.
However, should Republicans control both the House and Senate, Trump’s policies could face fewer hurdles, reigniting market momentum. Here’s a closer look at what experts recommended across key asset classes:
EQUITIES
Market analysts expect increased volatility but advise investors to remain agile. “Prepare for swings,” said Asia-Pacific head of UBS Global Wealth Management’s Chief Investment Office Tan Min Lan. “We advise investors to be ready to capitalise on any market reactions.”
Global market strategist at Invesco David Chao added that US assets, particularly equities, often perform well in the year following an election – a trend that may offer opportunities in the months ahead.
Insead associate professor of finance Ben Charoenwong said, “Tough trade policies with China actually tend to increase diversification benefits, so Singapore-based investors may want to consider owning broader Asian stocks that may benefit from the supply-chain decouplings.
“Given Trump’s uncertain and aggressive stance, defence stocks may provide a hedge to rising tensions. There are also plenty of thematic bets that can be made, such as short importers and long domestic producers.”
Phillip Securities Research’s head of research Paul Chew, expects ASEAN electronics and other exporters to benefit, “as their competitive edge improves with punitive tariffs on China and a stronger US dollar”.
He expects Singapore banks to gain from higher interest rates, a steeper yield curve and increased volatility in capital markets.
In contrast, the real estate and industrial commodities sectors may be hampered by high interest rates and dampening construction, he noted.
BONDS
Bond yields have risen substantially, and levels appear more attractive. However, the market volatility is here to stay, noted the Julius Baer report.
“We prefer corporate bonds over government ones, favour a balanced duration approach, and monitor a possible shift in trade policy to refine our strategy in the riskier segments,” it added.
Chew said European bonds are appealing, “due to disciplined fiscal budgets and potential interest rate reductions as exports weaken from slower global trade”.
“In contrast, long-term US bonds look vulnerable amid risks of structural inflation driven by potential mass deportations, high import tariffs and aggressive fiscal deficits.”
Chung said, “Shorter duration bonds look to be the safer place for the time being, until we figure out the magnitude of potential tariffs and the impact on inflation.”
