Video Webcast

60 seconds on political risk in 2017

19/10/2016

Keith Wade

Keith Wade

Chief Economist & Strategist

All the focus at the moment is on the US presidential election, and we have seen the opinion polls narrowing quite sharply over the last month. So, the probability of Hillary Clinton winning is now about 56%; a month ago, it was about 70%, so it has come in very, very sharply and the probability of Donald Trump winning has increased quite significantly.That would be very important for investors, not least because he has some very aggressive fiscal plans, he also has some very aggressive trade plans. On the fiscal side, he wants to cut taxes and he also wants to cut spending.

I would be less concerned about the fiscal plans because I think Congress will rein him back on that but he’ll have a lot of freedom to do what he wants on the trade side so we’ll probably see tariffs going up on China and Mexico. In terms of the US economy, I think that’d be quite stagflationary and quite damaging for the economy so that’s a bit of a negative for investors.

The other focus of political interest of course will be on Europe in the next few months. We’ll have the Italian referendum coming up in December but going into 2017 we have three general elections to focus on in the Netherlands, France and Germany, so political risk is going to be with us right through 2017.

 

Important Information
Any security(s) mentioned above is for illustrative purpose only, not a recommendation to invest or divest.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The views and opinions contained herein are those of the author(s), and do not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Opinions stated are matters of judgment, which may change. Information herein is believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy.
Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. Exchange rate changes may cause the value of the overseas investments to rise or fall. For risks associated with investment in securities in emerging and less developed markets, please refer to the relevant offering document.
The information contained in this document is provided for information purpose only and does not constitute any solicitation and offering of investment products. Potential investors should be aware that such investments involve market risk and should be regarded as long-term investments.
Derivatives carry a high degree of risk and should only be considered by sophisticated investors.
This material, including the website, has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.