How Trump’s Second Term Affects The Investment Market
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If you haven’t already heard, Donald Trump has been elected as the President of the United States once more. As such, global markets are bracing for the economic and policy shifts likely to emerge under his renewed administration. His first term as president proved to be an interesting one, with local markets seeing an immediate decline before eventually rebounding with indices like the Dow Jones and S&P 500 reaching record highs shortly after.
So how does Trump’s reelection affect Malaysian investors? According to Ahmad Fidauddin, Senior Equity & Derivatives Dealer at Moomoo Malaysia, political shifts in the US typically introduce some degree of market volatility, and Trump’s re-election is likely to sustain this pattern.
Thanks to the anticipated changes in trade and foreign policy, the FBM KLCI saw a 3.29% dip within the month from 1,616.35 points early in the month, closing at 1,601.88 points for the end of the month, as pre-election uncertainty prompted cautious trading.
Impact on key Malaysian sectors under Trump’s administration
Moomoo Malaysia expects three key market sectors to be affected by the new Trump administration. These include:
Energy
Trump’s policies are expected to favor traditional energy sectors, supporting fossil fuel industries and easing regulations. For Malaysia, this aligns with the strengths of its oil and gas sector.
Trade and export-dependent sectors
Malaysia leans more heavily towards being an export driven economy. As such, protectionist policies could pose a significant challenge. This is especially true for sectors like palm oil, electronics, and rubber, which are some of the nation’s key exports.
Technology and manufacturing
Trump is a known advocate for domestic manufacturing. It is possible that his administration may continue this line of interest, thus potentially disrupting global supply chains. The semiconductor industry in particular is currently of great interest, and is where Malaysia holds a strong position.
How financial markets have responded to Trump’s re-election
In a nutshell, the U.S. financial markets have rallied to the news. The U.S. Dollar Index climbed 1.6% to a one-year high, U.S. 10-Year Treasury Notes yield increased by 12 basis points, and futures for the S&P 500 and Russell 2000 advanced by 1.2% and 2.6%, respectively.
According to moomoo, financial stocks led the surge, with Wells Fargo & Co (WFC.US) up over 9%, while Goldman Sachs (GS.US), Morgan Stanley (MS.US), and Citigroup (C.US) saw increases exceeding 7%.
Cryptocurrency-related stocks rose significantly, with Citigroup (C.US) and Coinbase (COIN.US) climbing over 10%. In particular, bitcoin has surged to a new all-time high. Trump is known for advocating a “crypto capital” vision for the U.S., cryptocurrencies are expected to continue upward momentum.
Source: Moomoo Malaysia; T&C apply
Investor strategies for a volatile environment
In light of Trump’s re-election and the expected market turbulence, Malaysian investors should adopt diversified strategies to manage risk and capitalise on opportunities.
A balanced portfolio is highly advisable as it can help investors to navigate short-term volatility, while also positioning for growth in sectors that align with Trump’s policies and global trends.
Investors are also advised to remain vigilant and well informed, closely monitoring immediate announcements with regards to US trade policies and regulatory changes. Those who have portfolios in sensitive sectors should also pay extra attention and prepare for any necessary adjustments as the impact of Trump’s policies becomes clearer.
