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U.S. Elections 2016

Barings’ investment professionals provide insights on how the U.S. presidential election may impact the fixed income, equities, alternatives and real estate markets.

Global Equities


Donald Trump’s surprise electoral win marks a rare occasion in politics where uncertainty is now likely to increase rather than fall post-election. For the United States, such a situation is unprecedented. Trump’s contentious and anti-establishment campaign has frayed political alliances, which will make it difficult to muster the congressional support needed to advance his policy proposals for a more protectionist and isolationist U.S.

Policy stability and respectable economic growth, two factors that underpinned strong rises in the U.S. equity market in recent years, now appear at stake. Equity valuations, which have already been correcting downwards, are likely to fall further. For investors this could present a buying opportunity in a market that has traded at relatively expensive levels, but we would stress here that these shorter-term market movements do not alter our bottom-up investment approach.

We focus on companies, not economies or politics. In finding investments, we seek out high quality businesses that offer the potential for compelling structural growth. Economies might be growing at a pace below historical levels and political uncertainty is high, but innovation is thriving. Right now we are seeing rapid advances in electric vehicles, advanced driver assistance systems, autonomous automobiles, transportation as a service, digital content delivery (music and video), e-commerce and medical technology. Subject to reasonable valuations, we continue to see good growth opportunities in these areas.

The investment case for the companies that are delivering structural growth is not dependent on who holds presidential office in the U.S., but rather the companies’ strong position in their respective industries. Today, we see many of the above technologies entering the mainstream, but market penetration still remains surprisingly low. Our ability to invest in companies that offer enduring and multi-year growth supports our positive investment outlook, even in an uncertain political environment.

 

David Bertocchi

Head of Global Equities

Market Insights

High Yield

We anticipate that high yield issuers will largely weather any short-term volatility ...

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Multi Asset

Trump's victory to have a profound effect on global markets ...

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Emerging Markets Debt

We believe the environment remains a healthy one for emerging markets and we continue to see ...

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Multi-Strategy Fixed Income

The U.S. economy remains in reasonably healthy condition and corporate earnings are fairly robust ...

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Private Equity

We don't expect any one political event, such as the U.S. Election or Brexit, to impact our portfolio ...

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Real Estate

At the end of the day, the fundamentals underlying the U.S. real estate market are sound ...

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Global Equities

The investment case for strong companies is not dependent on the president ...

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Infrastructure Debt

Infrastructure spending in the U.S. was one of the issues that both major parties actually agreed upon...

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Structured Credit

Fundamentals are solid & the direct impact of the election are somewhat limited

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Small Cap Equities

Our focus remains on the fundamentals, following a Trump win ...

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Emerging Market Equities

Uncertainty is the big takeaway from Trump's win ...

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Asian Equities

Despite a change of U.S. leadership our outlook for Asia remains strong ...

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