It’s looking less and less likely as time goes on, but we have been thinking a bit about what might happen in the markets if Donald Trump were to be elected President of the USA.

He hasn’t exactly inspired investors, and indeed the markets seem to be reacting positively as his chances of being elected diminish. But are they making a mountain out of a molehill? A good place to start is by looking at another big political event in 2016, Brexit.

When Britain voted to leave the European Union in June this year, the markets were sent into panic mode. We saw the markets fall, then for a relative short period movement up and down, as investors decided how they felt about Brexit. After this period, everyone seemed to realise that Britain wouldn’t leave the European Union any time soon, that a Brexit takes time, and that the world wasn’t really burning down. The markets settled back and even rallied higher than the pre-Brexit levels and calmness was restored.

Why is this important?

Whilst Donald Trump becoming President would certainly cause some uncertainty, it is unlikely that he will be able to dramatically affect the USA or business as many seem to predict. He does not have control of congress, he does not have support of much of his own party and as President Obama found out, it is difficult to enact significant changes or allocate funds for new projects – such as building a wall between Mexico and USA - with this dynamic.

So expect some short term volatility if the unlikely happens and Donald Trump becomes President, but as we always remind Raiz investors, remain calm and stick to a disciplined investment strategy!

Important Information:

This information is general in nature and does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should not act on this information.  The information is based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information.