Trump vs. Biden: What the U.S elections mean for emerging markets

The highly anticipated US election is underway with over 98 million votes cast in pre-election polls, sparking discussions on how the outcome will impact emerging markets. Victor Aluyi, Head of Portfolio Management at Comercio Partners, provided insights on the potential implications of the elections on global trade, stimulus efforts, and market liquidity. Aluyi highlighted two possible outcomes of the U.S. elections. A decisive win for either party could have a positive impact on markets, while a contested or delayed result could lead to market uncertainty. He referenced the 2000 Bush-Gore election, where U.S. and European markets experienced a 10% decline during the contested period. The discussion focused on the significance of a 'blue sweep' scenario, where Democrats secure the White House, the House, and the Senate. This outcome could lead to substantial stimulus measures, potentially exceeding $3 trillion, aimed at reviving the economy and addressing the impact of the ongoing COVID-19 pandemic. Aluyi also touched upon the implications for global trade, emphasizing that a blue sweep might bring more stability and less uncertainty to international trade relations. In contrast, a Republican victory could prolong trade tensions, particularly in the U.S.-China trade conflict. Regarding emerging markets, the continuation of unprecedented monetary support was highlighted as a key factor driving market performance. The magnitude of stimulus packages and monetary easing measures would depend on the election outcome and legislative developments. A blue sweep could result in a significant influx of stimulus, providing a boost to emerging economies. In the context of Nigeria's financial markets, Aluyi predicted that liquidity would remain a dominant force in shaping market trends. The fixed income market is expected to continue feeling the impact of abundant liquidity, with fund managers navigating between safety and risk-taking amid market uncertainties. Overall, the U.S. elections carry substantial implications for emerging markets, with the potential for market volatility based on the election outcome. Investors and policymakers alike are closely monitoring the developments, anticipating the impact on global trade, stimulus measures, and market liquidity moving forward.