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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.

Asian Equities

Trump’s victory in the U.S. election and the clean sweep of Congress has already caused great volatility in financial markets. This is due to the president-elect’s relative lack of public sector experience, and intended policies that could generously be described as unconventional. Generally, a Republican Party win is considered “good for business,” but whether this will be true with a Trump presidency remains to be seen, especially as he will control both the Senate and the House of Representatives.

If short-term uncertainty creates a risk-off environment for traditional risk-assets, such as emerging market equities, there could be opportunities to accumulate long-term, fundamentally strong names at lower prices. In this volatile environment, we continue to seek and find growing companies that we believe will outperform in almost all economic scenarios, except for the most extreme cases (e.g. a global recession or a burst of a global asset bubble). In addition, our Asian portfolios have moderated exposure to bulk / commodity exporters to the U.S.

If Trump’s victory creates longer-term volatility that causes a significant flight to safety to assets such as the U.S. dollar and / or gold, then the Indonesian and other Southeast Asian markets and currencies could be negatively impacted, as has been the case in the past. We are aware that such a scenario is a plausible one. Although Trump’s administration could negatively impact U.S. / China relations, we believe other factors, such as the secular slowdown of China’s economic growth, the weak Renminbi and the rebalancing of the country’s economy toward a consumption-driven paradigm will have a greater long-term impact on China and other Asian equities.

Despite the change in leadership in the U.S., we remain confident in the long-term strong growth outlook for Asia. Though the U.S. economy is still the largest in the world, and important to the fundamental outlook of Asian companies, we note that Asia ex-Japan’s weighting of global GDP continues to climb. Our research efforts are focused on bottom-up, stock specific fundamentals, where we seek and continue to find strong Asian companies with positive growth outlooks that are trading at attractive valuations.


 

 

 

HyungJin Lee

Head of Asian 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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