Investors To Experience Short-Term Volatility Over Trump Win, Says OMGI

By Massita Ahmad SINGAPORE, Nov 9 (Bernama) -- Investors will experience short-term volatility following the just-ended 45th US presidential election, says head of Asian equities at Old Mutual Global Investors (OMGI), Josh Crabb. Crabb described the result as "a far from straightforward outcome for investors." "The directionality of the equity market is likely to be a risk asset sell-off in Asia," he said. The Republican Donald Trump beat Democrat Hillary Clinton in a close race early Wednesday to become the new US President. However, the market would see a potential rebound as bargain hunters come in on the realisation that Congress will probably curtail some of Trump's election promises, said Crabb. Despite the short-term uncertainty, Crabb said OMGI continues to focus on the Asian opportunity. "We believe that the US equity bull market looks long in the tooth, while Asian equity markets, by contrast, are set to outperform over the next few years," he said. Crabb said Asian equity markets are relatively cheap and under-owned, and are likely to register earnings growth of around 7.0 per cent for 2017. "We have not altered our positioning materially, other than raising a small amount of cash for de-risking purposes, which we started redeploying again late last week. "Our strategy remains to be positioned for a cyclical upturn in Asian economies and we would use any market pullbacks as a buying opportunity," he said. "Given the market's vulnerability to short-term volatility, a delay in raising US interest rates is now a distinct possibility. "That leaves the US dollar looking potentially weaker but is welcome news for Asian emerging economies looking to service their dollar-denominated debts more cheaply," said Crabb. On Trump's repeated attempts to disparage China at any given opportunity, Crabb said "it is likely to mean tariff increases, although the exact timing and by how much remains to be seen." "We believe Trump will carry out his electoral pledge to withdraw from the Trans-Pacific Partnership and renegotiate the North American Free Trade Agreement. "The effect on Asian economies would be smaller trade surpluses, particularly on the growth of the more export-orientated countries such as South Korea and Taiwan," Crabb said. -- BERNAMA