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Point of View

Sanlam’s response to Donald Trump’s US election victory

 

Donald Trump has been declared 45th President of the United States of America. While the result might be a surprise, we believe that once the shock has subsided President Trump will be more moderate in tone and perhaps not quite as extreme as he was on the campaign trail. Here we set out some of our initial thoughts on why today’s election result should not be cause for concern. 

Pro-business policies

Although Trump was not the preferred candidate of big business and the banks, he does have many pro-business policies, including increasing the fiscal deficit, cuts in taxes, a potential amnesty on repatriating US companies foreign earnings, and a weaker stance on regulating drug pricing. All of these policies should be positive for many companies that are held in client portfolios.

Political direction

The Republican Party has control of Congress, the Senate and the White House which should help reduce political bickering and grid lock, much of which defined periods of the Obama presidency. With less division on Capitol Hill, we could see a more stable political landscape under President Trump which could be good for the wider global economy.

Experience?

Trump is the first US President to enter office with almost no political experience, and on the campaign trail made a number of attacks on the US Federal Reserve – a cornerstone of the US economy – as well as foreign trading partners, including China and Mexico. Once installed in office, we expect the rhetoric to subside but who he appoints around him will be crucial to the overall tone and direction of his administration.

Our approach

In the short term Trump’s election will create some market volatility with immediate winners and losers, but for now the bigger picture remains relatively unchanged. Markets will soon turn to focus on a new issue, possibly European elections set to be held in 2017, or the likelihood of a US rate rise in December. Our diversified global investment approach is well positioned to navigate volatile market environments and provide stability for our client portfolios.
 

A word from our Chief Investment Officer, Philip Smeaton

“The big news today might be just how little markets have reacted to the news of Donald Trump’s victory. The tone of his first speech was marked by its moderation and the markets have rallied ever since. We expect this to be the start of a much more conciliatory and balanced presidency than many might have expected.”

A PDF version of this responce is available.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.