Emerging Markets and the 2016 US Election

Whether the election is won by Republican candidate Donal Trump or Democrat Hillary Clinton, emerging markets will reflect investor sentiment as the 2016 election is about to close.

Investors could turn to safe government bonds, US dollars, and yen while resisting riskier equities and emerging markets, as was seen after the United Kingdom's historic Brexit vote last summer.

However, investors' reaction to US elections doesn't seem to last very long.

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Should Clinton win, pharmaceutical and biotech stocks might be pressured to curb price increases on drugs.

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Should Trump win, polling and performance suggests that drugmakers, in addition to insurers and banks, could perform bitter under his administration.

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In terms of bonds, yields have gained 35 basis points since late July - when Clinton's lead over Trump significantly widened. However, should Trump win, 10-year yields could decline at least 10 basis points based on models from the Brexit results.

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In regards to currencies, the Mexican peso, often the benchmark for emerging market currencies, has directly followed Clinton's recent polling numbers. With a Clinton victory, Mexico would benefit the most while Trump advocates the country will pay for a border wall.

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Gold, platinum, and silver will see the largest gains if Trump wins the election, according to analysts. Gold futures rallied on news of Clinton's email scandal, which continues to plague her campaign right up until the end.

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Read more at Bloomberg.