Speaking at a recent event in Melbourne, Schwarzman reflected on the investment implications of a potential Donald Trump election victory, highlighting the certainty that Trump’s approach would be diametrically opposite to President Joe Biden’s actions during his presidency.
“The US elections are too close to call and have so many variables associated with them,” Schwarzman noted, reflecting the sentiments echoed by many analysts and observers.
Reflecting on public sentiment regarding the candidates, Schwarzman noted that polls reflect widespread dissatisfaction with both options, a sentiment he described as unusual in American politics.
“The polls basically say that people wish neither of these two candidates were their choices,” he said.
Discussing the broader context, Schwarzman pointed out that a significant portion of the population feels discontented.
“Seventy-five per cent of our population thinks we’re on the wrong track. So we have an unhappy group of citizens,” he said, highlighting a key aspect of the current political landscape in the US.
Delving into the potential policy outcomes based on the election results, Schwarzman suggested that President Biden’s re-election would likely continue current policies, while a return of President Trump might shift towards older policies with less regulation.
Moreover, addressing specific geopolitical challenges, Schwarzman highlighted the Middle East and the potential implications of different leadership styles.
“He [Trump] claims if he had been president that we wouldn’t have had Ukraine, and Iran and the issues that are facing us in the Middle East.
“And his term of office, there were none of those wars and exactly why, everybody can figure it out by themselves. Was it good luck, was it policy, were people scared of him, who knows. But you’ll have much different policy outcomes on every one of those things under Trump,” the CEO said.
Ultimately, as the election draws closer, Schwarzman said “it’s a pretty stark choice for Americans”.
“Given there is very little difference between the two candidates in terms of the polling, sometimes Trump’s ahead a few points … it’s a nailbiter and nobody knows how this is going to work out.”
Earlier this year, Ehsan Iraniparast, senior vice-president and emerging market analyst with Payden & Rygel, said there would be winners and losers regardless of the election result.
He expressed the challenge of predicting outcomes, stating, “It’s difficult to rely solely on past trends to predict negative impacts under a Trump administration.
“It’s just going to change the winners and losers. You do have potential issues with Mexico, maybe a realignment away from some democracies towards less democratic regimes, these types of switches that we’ll have to be mindful of,” he said.
“I think one thing for sure is it’s going to be an extremely tense build-up to the race and as we get to Q4, people are going to be fretting one way or another.”
But Andrew Swan, portfolio manager of the Man GLG Asia Opportunities Fund, highlighted in January the critical importance of the election in the context of Asian markets.
“There are some experts who feel that Donald Trump, if he gets back in, will do a deal with China and with Taiwan,” he said.
“He just wants the problem gone [and] does see himself as a deal maker.”
Looking back, Swan highlighted lessons from the behaviour exhibited by global markets when Trump was first elected in 2016. Namely, Asian markets had just recovered from a deflation scare in China the year prior.
“Going into 2017, the economies were actually very strong. Then what you started to see is markets started to de-rate, the multiples started contracting despite very good earnings,” he said.
“The thing is that, almost to the day, the market started derating in Asia in early 2017 when Trump started talking about trade wars, and despite the economies continuing to be very strong, company fundamentals in Asia started to underperform.”
Also in early 2017, the US withdrew from the Trans-Pacific Partnership, affecting trade dynamics in the region, before later imposing tariffs on a wide range of Chinese goods.
Fluctuations were observed in currencies, stock prices, and commodity markets across Asia.
Previously, Global X Australia’s David Tuckwell, a senior product and investment strategist, said at an event in Sydney that a Trump presidency “doesn’t bode very well” for the planet, based on initial signs from the campaign.
He predicted solar and wind stocks would feel the sting if the Inflation Reduction Act and subsidies for renewable energy development are scrapped. Namely, Trump has already vowed to gut the landmark climate law which provides over $500 billion in tax breaks and subsidies for clean energy.
“That’s one area that we might see struggle next year as markets anticipate a Trump presidency. [However], it won’t be all bad news for clean energy and the renewable energy transition should Trump win,” Tuckwell added.
Instead, there could be a pivot to uranium and nuclear power, he said.
