As chaos reigned across global markets in August last year amid signs that China's economy, the world's growth engine, was slowing, Donald Trump took to Twitter.
Two months into his campaign to become the next US president, he was seen as little more than a temporary distraction in an initial field of 17 Republican party candidates.
But after the Dow Jones Industrial Average fell by more than 1,000 points at the start of a particularly ugly Wall Street session, the then outsider sought to share his business acumen to separate himself from rivals.
“Markets are crashing – all caused by poor planning and allowing China and Asia to dictate the agenda,” he said in one of a series of Tweets issued that day. “This could get very messy! Vote Trump.”
‘Brexit times 10’
Fourteen months later, world financial markets are rattled again. This time, though, they are fixated on Trump, as investors have begun to price in the possibility of him taking over the Oval Office – an upset that the New York native himself has said would equate to “Brexit times 10”.
Poll aggregator FiveThirtyEight has cut Hillary Clinton’s chance of victory by 14 percentage points to 68 per cent since the FBI’s surprise move on Friday to reopen a probe into her use of a private email server while secretary of state.
"I thought Brexit would occur and I think Trump will be elected," said David Holohan, chief investment officer at Merrion Capital in Dublin. "Ultimately, the market may have been too complacent – as it was when it was approaching the UK referendum."
Shares have fallen globally this week, while safe-haven assets such as gold have surged and the Mexican peso, a bellwether for Trump’s candidacy given his plans to renegotiate a North American trade deal and build a wall along the US-Mexican border, has come under renewed pressure.
Some polls published this week have put Trump ahead of Clinton for the first time since May. However, an average of surveys compiled by the RealClearPolitics website was giving Clinton a 1.9 percentage point edge on Thursday, compared with more than seven points two weeks ago.
“A lot of Trump supporters may not be captured in the current polls, with talk that there may be a large number of ‘shy Trump supporters’ out there,” said Holohan.
Analysts like former IMF chief economist Simon Johnson, a professor at the Massachusetts Institute of Technology's business school, predict that Trump's anti-trade policies would cause a stock market crash and plunge the world, led by Europe, into recession and "a serious banking crisis".
Margaret Yang, a CMC markets analysts in Singapore, told Bloomberg that markets had already priced in a Clinton victory, meaning there would be a "limited" upside for shares if she wins.
“Valuations of US equities are quite high, and a Trump victory will trigger a massive selloff,” Yang said. Many would consider that a classic “black swan event”, she added, so the reaction would be “much more severe” than Brexit.
Barclays predicted in a report this week the S&P 500, the broadest US stock market index, would gain as much as 3 per cent if Clinton takes hold of the White House but slump by as much as 13 per cent if Trump succeeds.
“If Trump were to get in, we would expect that equities would sell off but we also believe that the dollar would strengthen on the back of a safety trade,” said Holohan at Merrion. “Typically when the market gets worried, you see funds moving into safe havens, including the US dollar.”
Market observers have also been surprised by the nature of Donald Trump's personal attacks against Janet Yellen, chairwoman of the Federal Reserve, alleging she's playing political games by keeping US interest rates low to make president Barack Obama and the Democratic nominee to succeed him look good.
While Yellen reportedly will resist pressure to step down should Trump be elected president, Holohan said: “There’s a real chance of a more hawkish voice taking over the helm of the Fed, leading to interest rates moving higher.”
Hurt Ireland’s interests
Closer to home, former taoiseach John Bruton said on The Irish Times Business Podcast this week that a Trump presidency could hit global trade and hurt Ireland's interests. It comes at a time when Dublin's Iseq, among the worst performing indices in Europe after the UK referendum, appears on track to record its first annual decline since 2010.
Bruton, who served as the EU’s ambassador to the US for five years during the Bush and Obama presidencies, said Trump could impose his pledged 45 per cent tariff on Chinese imports straight away.
“I think we could have a trade war if he does the things he says he’s going to do, because others will retaliate,” he said. “Europe is very dependent on demand from China.”
Ireland could take a hit if a Trump administration fulfilled his promise to cut corporate taxes, leading to fewer US company profits being booked in Ireland, he added.
Corporate Ireland is also beginning to fret about the impact of a possible Trump victory. While Smurfit Kappa's chief executive Tony Smurfit has made little secret in the past year of his ambition to acquire businesses in the US, he said his appetite would wane if Trump took power.
“I think it’s just still unbelievable we could be contemplating a Donald Trump victory,” Smurfit told The Irish Times on Wednesday. “I think the world will take a more cautious approach [on US investments].”
However, others, such as Aidan Donnelly, a senior equities analysts at Davy, are more relaxed.
Hard line on drug prices
“I get the sense that there’s a lot of post-event rationalisation going on in global markets, trying to explain why we’ve seen equities declining recently,” said Donnelly. “The reality is that we have been close to all-time highs [in the US market], and we have just drifted back to levels seen at the end of June.”
Donnelly highlights that sectors such as healthcare, energy and real estate, which are seen doing better under a Trump administration than Clinton, have outperformed this week.
Clinton has publicly slammed specific pharmaceutical companies during the course of the campaign for increasing prices on old drugs, prompting speculation she would take a hardline stance in office and seek to curb drug price hikes.
Companies that build and maintain civil infrastructure, such as Dublin-based CRH, would have bigger opportunities for government work under Trump, according to some analysts, given that his plans for such spending are much more ambitious than Clinton's. The same holds true for military contractors, according to a Credit Suisse report.
Back on Twitter, Trump has gone into overdrive this week with the use of the hashtag #draintheswamp, as he promises to rid the US of big government and perceived corruption in Washington.
Investors are more concerned about the prospect of money being drained out of global stock markets if the former reality TV star prevails in the vote next Tuesday.
“If Trump wins, I think there could be an initial market shock, just as we saw with Brexit, given that people have been so focused all along on the possibility of Hillary winning,” said Donnelly at Davy. “You’d probably get a knee-jerk reaction. But fast forward a month or so, you’ll find that most of this would have dissipated.”