It was great speaking a few days ago during October’s webinar.
Most of the questions asked were focused on the US election, but we also had two questions on Hong Kong.
The main takeaways were:
- Whilst markets are usually more volatile before an election, they are most frequently up in an election year
- Markets historically perform better during times when incumbent Presidents win. The average yearly returns (during the election year) have been 9.3% if a new President is elected and 13.4% if the incumbent is elected.
- Historically, US Markets have done better during election years than the year after. But there have been many exceptions such as the last election. For international stocks the reverse has been the case – returns have been better in the year after a US election.
- However, there are too many factors influencing international and US stocks are often outside the control of politicians and presidents.
- Niche markets, like some in Latin America and Africa, are more affected by politics than the US Markets. Apple, Amazon and Netflix are essentially international companies, not American firms, in terms of revenue.
- Markets weren’t affected by the disputed 2000 election between Bush and Gore
- US futures markets fell by 5% after it was announced that Trump had won. They subsequently rose by 1% the day after. This once again shows that nobody can predict the markets
- Above all else, don’t panic or get too excited, regardless of the outcome
- US public and private debt is unlikely to affect markets for now. What is more likely to affect US markets and the USD is an incredible event. An example would be if the US failed to stop China from taking Taiwan in any future invasion.
- The Hong Kong Stock Market could go one of two ways. As more Chinese firms IPO there and leave the US equity markets, it could grow. By the same token, it could become weaker, as it has lost its special status.
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