U.S. election: Impact on emerging markets

Investors around the world are closely watching the U.S. election, trying to decipher what the outcome could mean for emerging markets and their investment portfolios. The election presents two very different paths for the investment market: a continuation of the current policies under a Hillary Clinton administration or a more uncertain future under a Donald Trump presidency. This uncertainty is causing concerns, especially when it comes to emerging markets and international trade relationships. Kai Reese, client investment strategist at SEI Investments, shed some light on the potential implications of the election on the investment market. Reese highlighted the stark contrast between the two candidates' views on trade and globalization. Hillary Clinton represents a more traditional approach, focusing on income distribution and fair trade practices, while Donald Trump's platform leans towards protectionism and putting up trade barriers to protect American jobs. The upcoming election, regardless of the outcome, is expected to set the course for future trade relationships and market dynamics. One of the major concerns raised by Reese is the possibility of a trade war with China under a Trump administration. Trump has previously suggested labeling China as a currency manipulator and imposing tariffs on Chinese goods, which could have ripple effects across global markets. This scenario could lead to increased costs and disruptions in the supply chain, impacting not only China but also other regions and countries that rely on Chinese exports. When it comes to the impact on the U.S. economy, Reese noted that while the Obama administration has made progress in lowering unemployment and driving economic growth, the next steps following the election could be crucial. The future trajectory of the U.S. economy will depend on the policies implemented by the incoming administration, and investors are closely monitoring the situation to gauge the potential risks and opportunities. In terms of investment strategies, Reese suggested that there could be a shift from defensive stocks to cyclical stocks post-election. Defensive stocks have been performing well in recent years, but as the economy strengthens and market conditions change, there may be a rotation towards more cyclical industries. SEI Investments is already positioning its portfolios to take advantage of this potential shift, anticipating that cyclical stocks could outperform in the coming quarters. Overall, the current climate of uncertainty surrounding the election has left investors on edge. The binary outcome and stark policy differences between the candidates have created a volatile environment in the markets. However, Reese emphasized the importance of maintaining a long-term investment perspective and being prepared to adapt to changing market conditions. Regardless of the election result, investors will need to stay vigilant and make informed decisions to navigate the evolving investment landscape.