Trump’s inauguration and the effect on equities
By International Adviser, 20 Jan 17
As Donald Trump is sworn in as the 45th president of the US, International Adviser has compiled the latest views on how his inauguration may effect your investments.
Josh Crabb, head of Asian equities, Old Mutual Global Investors:
When Donald Trump takes his place in the White House as the 45th US president, he can rest assured that he has done more to increase inflation expectations than Ben Bernanke and Janet Yellen (former and current heads of the Federal Reserve) put together.
That’s good news for pro-growth enthusiasts. Where markets are more nervous is over President Trump’s future relationship with China, and the Asian region more generally.
Given the large valuation gap that exists between Asian equities and their US counterparts, it would appear some of the anxiety is already discounted.
China has been roundly criticised for exporting deflation around the world, through the mechanism of currency manipulation – a particular bugbear of Trump’s. But the rise in the Chinese Producer Price Inflation (PPI) index, a key indicator of China’s growth being on track, puts paid to such accusations. More widely, Asian corporate earnings are experiencing something of a revival. The bottom line is it’s in nobody’s interests to adopt a policy of splendid isolation.
Trump is a dealmaker. It is highly likely he will undertake deals in Asia. Given that these economies are in sound economic health compared to a decade ago, we remain positive on the outlook for Asian equities, with a continued focus on the economically sensitive sectors of financials and industrials.
Tags: Natixis | Old Mutual
