Recession and European trading halt?
There could be a global recession following Trump's US Presidential election, according to institutional asset manager, Principal Global Investors.
Principal Global Investors' chief executive, Jim McCaughan, said if Trump fulfilled his promise on tariffs, which could stop trade in and out of the US, it would slow economic growth and that could cause a recession.
However, there was a much higher probability that economies adopted an anti-trade populist view following elections in France, Germany and Netherlands next year, he said.
"And of course the Italian constitutional referendum could go against the Renzi Government. If you add that all up, there's a chance that this anti-trade movement becomes much more global and that would mean that you'd see declining production, declining economic activity and ultimately more unemployment."
"That is something that is legitimate to fear," he said.
In addition to Europe, emerging markets were particularly at risk from a decline in trade, he said.
Notwithstanding that, post the US election, 10-year bond yields remained attractive, worldwide commodity demand would continue to rise, and US markets would be favoured over foreign markets, McCaughan said.
Recommended for you
ETF investors would be wise to consider global or European exposure for their equity ETF allocations, according to AXA IM, with US government action expected to hit both its equity and bond performance.
A specialist ETF provider is seeking to become “the new Betashares” with its active ETFs, thanks to its use of algorithms to achieve outperformance.
Platinum Asset Management has entered into binding terms for a merger with L1 Capital with the firm to be renamed upon completion
Prime Value Asset Management has launched a retail fund investing in microcap companies, a new version of its existing wholesale offering.
