Markets warned not to be ‘complacent’ on Trump

Financial markets "can't be complacent" about the prospect of US Republican presidential candidate Donald Trump losing next month's election, even as he trails rival Hillary Clinton in polls, according to one of the world's most influential female executives in finance.

"I think the markets are not pricing in a Trump victory," Deb Clarke, global head of investment research at pensions and benefits consultancy giant Mercer, told The Irish Times on Thursday as the firm hosted Europe's largest institutional investors and asset managers at an event in Dublin. "I think there'll be some implications [if he won]."

Ms Clarke, named by Financial News as the most influential woman in asset management in 2012 and one of the top 100 females in finance in 2014, declined to say specifically how the markets would react with a Trump victory.

However, many market participants believe that equities would be sold off globally if Mr Trump won the race, as Ms Clinton is perceived as a more “market friendly” candidate.

Stimulus package

“If Trump wins, financials are likely to sell off while a Clinton victory will likely lead to a more positive reaction, simply because she represents the establishment,” Peter Garnry, head of equity strategy at Saxo Bank in Denmark, said in note on Thursday.

Still, he said that equity markets “could come roaring back if Trump unleashes a big fiscal stimulus programme to kick-start economic growth”.

A CNN/ORC poll released this week indicates Ms Clinton has a five-point lead over Mr Trump, with 47 per cent support among likely voters.

Meanwhile, Ms Clarke said that pre-occupation across Europe with a series of national votes over the next 12 months may draw out discussions on the UK’s exit from the EU, compounding market uncertainty.

Italy holds a constitutional referendum in December, while French, Dutch and German voters head to the polls next year.

The votes are occurring against the backdrop of a growing anti-globalisation and nationalistic sentiment across the continent, she said.

“That’s where you’ll see the uncertainty in the markets come through,” she said. “You’d wonder whether there’ll be any serious discussions about Brexit [during this period].”