US election results: “Implications for investment opportunities are significant” - Zuhair Mohammed, LCP

With Trump now declaring victory, the implications for investment opportunities are significant across various groups. 

Zuhair Mohammed, Partner and Head of Investment at LCP, commented:

“For US equity holders, there could be a notable shift, as markets may experience a small bounce while those who anticipated a Harris victory adjust to this new reality. Additionally, Trump’s much-heralded tax cuts are expected to pay dividends to US equity holders. However, if it is a clean sweep, the consequence will become more noteworthy.
“EM equities are net negative, led by China, but selectively other countries like India could benefit from this anti-China stance.

“When it comes to Trump’s protectionist agenda, this will help the US tech sector; however, it will also increase the concentration risks passive global equity investors find themselves exposed to. Meanwhile, if Trump follows through with the tariff regime he campaigned on, China and Europe will be big losers, and the US consumer will have to live with higher inflation and what older observers will call normal interest rates. 

“There is another matter that seems to have been drowned out by the US election extravaganza: the US debt burden. Already sitting at $35trn, the expectation is to exceed $50trn within the decade. 

“If US long-term rates ‘normalise’ up, expect global rates to trend accordingly. 

“The Dollar should perform well in the short-term, but further out, those debt levels and increasing deglobalisation will weigh on the currency. 

“Those hoping for an orderly transition to net zero will be disappointed in the near term, but that will present buying opportunities for climate transition assets; even the US President can't stop climate change.

“Finally, I suspect supernational organisations will find it hard to achieve their goals in the face of Trump’s isolationist policies.”