The unthinkable has happened. Watch our webinar video for our Wealth Panel’s views on how Trump win will affect the global markets and the investment landscape.
Contrary to expectations, Donald Trump has been elected the 45th president of the United States. Perhaps more surprisingly, markets remained relatively calm after the initial knee-jerk sell-off, especially in Asian markets.
Nevertheless, we expect volatility to remain elevated given the uncertainty for the financial markets as to what a Trump presidency really represents. Trump’s desire and ability to implement his economic policies remains unclear.
Also, ahead of the busy political agenda, European political risks loom. Coupled with extended valuations, equity riskreward remains asymmetrical for investors. Accordingly, we maintain our negative stance on equities.
Regionally, we continue to be negative on Developed Markets including U.S., Japan and Europe. Meanwhile, in anticipation of greater uncertainty for the region primarily in view of Trump’s stance on trade, we are lowering Asia ex-Japan from neutral to negative.
In terms of fixed income, we continue to advocate that investors remain circumspect and judicious when choosing to take exposure in Emerging Market high yield bonds even while we retain our positive stance on this asset class given Trump’s protectionist objectives. Also, we continue to advocate that investors reduce duration risk in their portfolios to around five years or under.
In line with our risk-off stance, we would also prefer to overweight cash. This will give us some flexibility to capture opportunities as they arise once clarity sets in.
In terms of tactical U.S. stock opportunities, domestically driven names are likely to hold up relatively better in the near-term. In particular, we like Healthcare as well as E-Commerce plays.
Given the uncertain policy climate, we would advocate that investors continue to diversify their core portfolio with multi-asset strategies to navigate potentially rocky terrain ahead.
Our favoured fund options include:
- BlackRock Global Multi-Asset Income Fund
- JP Morgan Global Macro Opportunities Fund
- Schroder Asian Income Fund
While we continue to prefer credits over equities, we would advise investors to seek exposure to high quality paper in a diversified manner to minimise single-issuer risk.
At the same time, given the prospect of a faster than expected pace of rate hikes in the coming years, investors should minimise duration risk in their portfolio by taking exposure to short-duration strategies.
Our favoured fund options include:
- LionGlobal Short Duration Bond Fund
- Fullerton USD Income Fund
- Allergan, Plc (U.S. Listing)
- Bristol-Myers Squibb Company
- Biogen Inc
- PayPal Holdings, Inc.
- Visa Inc
- MasterCard Inc.
We express our views in greater detail in the following write-ups:
Economics of Trump: Rhetoric to Reality?Equities: Cautious on Equities. Cautions on Asia ex-Japan
Foreign Exchange: U.S. Dollar Remains Well-Supported
Unit Trust: Diversify with Low Volatility Solutions
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