03 Nov, 2016
Trump’s lead on Clinton: don’t overreact to jittery markets, investors urged
Investors should not be too responsive to jittery global markets but should review financial strategies and investment portfolios, warns the boss of one of the world’s largest independent financial advisory organisations.
The warning from Nigel Green, the founder and CEO of deVere Group, comes as stock markets across the world appear to be anxious following the release of an ABC News/Washington Post poll that puts Donald Trump ahead of Hillary Clinton in the race to be the next U.S. president.
Mr Green comments: “After the publication of the poll that shows Trump closing in on Clinton’s lead, shares in Asia hit a seven-week low, Europe’s Stoxx 600 index has hit its lowest level since the summer, and the dollar has been on the defensive.
“The markets are reacting to the uncertainty that Trump represents. With Trump closing the gap on Clinton, who is perceived as offering more stability, the markets are hoisting early red flags”.
He continues: “However, it must be stressed that this is one poll, it is just one percentage point, and global markets almost always overreact”.
“Investors should avoid knee jerk reactions to jittery markets at this stage”.
“Having said that, this unusual election has changed American politics and it is likely going to affect how people create, grow, maximise and safeguard their finances in the future”.
He adds, “Whether it is Clinton or Trump who wins, we can be assured that change is on its way. Americans need to act now to shore-up their financial strategies as there will be key opportunities they will want to capitalize on and risks they will want to mitigate”.
“The best advice right now is to review your financial strategy to ensure the changes will be beneficial to your wealth”.
Nigel Green, the deVere Group CEO, concludes: “Investors should be ensuring that their portfolios are properly diversified, they should be aware of their tax liabilities and how they could change and, most importantly, they should seek professional independent advice”.
In October, Mr Green commented: “Should Trump win, there is likely to be an immediate negative shock in the financial markets due to increased levels of uncertainty and a shaking up of the status quo. In response, it can be expected that the Fed will hold off implementing another interest rate hike until 2017, giving another short-term boost to equities”.
“In the longer-term, Trump could preside over looser fiscal policy, including increasing the defence budget and cutting taxes. This would constitute a demand uptick for the U.S. economy”.
“That said, he has some controversial protectionist policies that could impede real, sustainable economic growth”.
“Should Clinton win, the financial markets are likely to immediately bounce as they breathe a collective sigh of relief – they highly value the continuity she represents. In response, it can be expected that the Fed will raise rates this year, which will be a short-term boost to Treasuries and put equities under pressure”.
“However, any financial malaise that could potentially be created is likely to be tempered by the markets’ general sense of relief”.
“That said, even with Clinton there would be changes ahead. For instance, like Trump, she has also jumped on the anti-globalisation bandwagon and this could damage longer-term economic growth. In addition, tax hikes are likely to be on their way for wealthier American families”.