By Naomi Rovnick
LONDON (Reuters) – Big worldwide merchants are exiting widespread trades that guess on US President-elect Donald Trump’s tax and tariff insurance coverage insurance policies boosting Wall Street and wreaking hurt abroad and swooping in on among the many Nov. 5 election’s biggest market victims.
After US shares and the buck bounced on Trump’s growth agenda and commerce warfare fears pressured Chinese, European and rising market property, money managers are looking for bargains in places the place pessimism might have gone too far.
“The thesis that Trump is good for the US and bad for the rest of the world is a very common narrative,” talked about John Roe, head of multi-asset funds at Legal & General Investment Management, which manages 1.2 trillion kilos ($1.52 trillion) of investments.
He talked about this had glad him to buy non-US property that can have been excessively purchased – like European car-makers and the Mexican peso – and shut pre-election positions that profited from sterling and Chinese tech shares falling.
European auto shares touched their lowest in almost two years on Wednesday whereas the Mexican peso has fallen larger than 2.5% versus the buck this month and sterling is down some 5% in direction of the greenback since end-September.
Shaniel Ramjee, a multi-asset co-head at Pictet Asset Management, which runs 254 billion Swiss francs ($285.43 billion) of client funds, talked about he had elevated holdings of Chinese shares and Brazilian bonds as a result of the election.
“There will be a really good opportunity in assets that have weakened ahead of and after the election, we see a lot of value,” he talked about.
Investors are literally questioning the favored market view that Trump will aggressively pursue insurance coverage insurance policies that exacerbate US inflation and derail Federal Reserve cost cuts, given voter anger about residing costs and shopper price rises.
Too far?
Since the eve of the election, US shares have risen larger than 4% whereas European equities have fallen about 1% and rising market shares are at two-month lows.
“The news flow (for non-US markets) is so negative right now that any kind of good news could move things quickly,” Morningstar European equity strategist Michael Field talked about.
The euro, down about 3% since Trump’s win, hit a one-year low of $1.052 this week and 10-year U.S. Treasury yields jumped 14 basis components (bps) to 4.47%, as retailers guess on elevated US charges of curiosity and inflation.
Europe is mired in pessimism, exacerbated by the collapse of Germany’s authorities and fears for exporters, with Volkswagen shares shopping for and promoting at about 3.3 events forecast earnings and European chemical producers down 11% since late September.
