A Hillary Clinton victory in the US presidential election in November could quickly send the US stock market to new record highs, but a Donald Trump in the White House could be better for equity investors over the longer term, according to Marko Papic, Chief Geopolitical Strategist at BCA Research, an independent research house.
In our latest podcast, Papic explores the likely outcome of America’s upcoming vote and its impact on the US economy and stock market – and reaches some surprising conclusions.
In conversation with Ben Gutteridge, Brewin’s Head of Fund Research, he says: “In the long term Donald Trump would be positive for US equities mainly because of his foreign policy.”
By withdrawing from involvement in foreign affairs Trump would massively increase global geopolitical risk, but Papic concludes that US equities could outperform as a result.
A Clinton victory would remove a source of uncertainty, encouraging investors to switch from cash and bonds into riskier assets – though the positive boost to US equity markets might not last.
“I suspect Hillary Clinton would be very bullish [for equities] over six months,” says Papic. “But then what I suspect will happen is that investors will have a little bit of remorse as they realise Bernie Sanders has not gone away.”
Bernie Sanders stood against Clinton for the Democratic Party presidential nomination on a more left wing platform. The strength of his campaign is likely to push the Democratic Party in that direction, Papic believes.
Although he thinks a Clinton victory is more likely, Papic says it would be wrong to conclude that the election is already over for Trump. He also explains why the impact on the US economy is likely to be the same whoever wins.
“Donald Trump and Hillary Clinton are trying to one-up each other in terms of who’s going to spend the most money… If you step back as an investor and forget
Donald Trump, forget Hilary Clinton, what you are left with is a more inflationary world.”
To listen to this or other Brewin Dolphin podcasts, go to www.brewin.co.uk/sharing-our-thinking/podcasts
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All information within this article is for illustrative purposes only and is not intended as investment advice.
The opinions expressed in this podcast are not necessarily the view held throughout Brewin Dolphin Ltd.