Yet again Emerging Market economies were influenced by President Trump. His inauguration centred around protectionist rhetoric, “America first” which may well mean Emerging Markets last. Tougher immigration and trade protectionism are just two policies which will likely adversely affect a number of developing countries. Mexico has been singled out as the most exposed in the short term, with 25% of its GDP generated from exports to the US; Russia, however, may see benefits following President Trump’s warmer tones on sanction lifting.
The much citied fiscal expansionary programme will lead to a faster US Federal Reserve rate hiking cycle and strengthen the US dollar – potentially exposing those Emerging Market economies with hefty dollar denominated debt. We remain cautious of the region and will focus on funds that are underweight Mexican assets and overweight geographies less exposed to a more isolated United States.
If you are unsure whether an investment is right for you, please contact us for advice on 0800 877 8866 or by email at email@example.com.