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Investors can expect continuity from a President Kamala Harris but unpredictability if President Donald Trump returns for a second term following the US elections, which are less than six weeks away, UBS Global Wealth Management have said.
When he accepted the Republican nomination in July, Trump promised to “drill, baby, drill”. Themis Themistocleous, the bank’s head of chief investment office, EMEA, said he could encourage US oil companies to spend more money and produce a lot of oil knowing that it will have an impact on the price of oil.
Themistoclous noted that such a stance could be potentially negative for the Middle East, particularly for countries with economies dependent on oil and gas.
The Fed
Based on Harris’s stance, Themistocleous said, the Federal Reserve would be likely to continue interest rate cuts through next year, supporting the economy, which would filter through to dollar-pegged economies in the region. Trump, on the other hand, has implied that he would attempt to influence the Fed if he returned to power, which would likely create uncertainty again.
Foreign policy on Middle East
Regarding the two candidates’ foreign policy stances on geopolitical events impacting the Middle East, Mark Haefele, Chief Investment Officer at UBS, said, “I think that there’s every reason to assume that the foreign policy of a Harris administration will be similar to what we see now: rules-based, human rights-concerned and focused on allies and focused on minimising civilian casualties, and focusing on a ceasefire.”
On Trump’s foreign policy, he too expects unpredictability.
“I would say, from a market participant perspective, the Trump administration [of 2016–2020] was almost exhausting in its unpredictability, so that element is likely to continue. [It is] much harder to predict how things will go, and there is a stated element of brinkmanship to the Trump policy.”
Haefele said the wealth manager was telling clients to avoid “rash moves” based on the election alone, as there are other factors to consider, including geopolitical issues and the growth picture in China following new stimulus.
Diversified and balance portfolios were important, he said, and clients with large tech holdings are advised to use hedges due to the recent “tremendous run” on tech stocks.
(Reporting by Imogen Lillywhite; editing by Daniel Luiz)
