5 ways a Trump presidency could impact Asia

With the US election day upon us, we reflect on what could happen to Asian markets

We are experiencing a sinking, fearful sensation.

All around the world, people are having to come to terms with the fact that come tomorrow, Donald Trump could be named the new president of the United States.

It’s undeniable that Hillary Clinton, whilst receiving her fair share of unpopularity, is generally seen as the more stable choice for much more than just political correctness. Offensive statements aside, a Trump presidency could lead to severe economic repercussions worldwide.

Elements of Trump’s controversy are being likened to the UK’s shock Brexit vote, which not only saw the British economy nosedive, but led to market shake-ups as far-reaching as Japan. Trump himself is emphasising the comparisons.

They will soon be calling me MR. BREXIT!

— Donald J. Trump (@realDonaldTrump) August 18, 2016

The following list is largely conjecture – after all, Trump’s ever-changing policy positions are well documented, but these are five potential after-effects of a Trump victory, which could impact Asia.

1. The US dollar will fall

While the dollar has been gradually strengthening since May 2016, many analysts are predicting an initial sinking of the dollar following a Trump win.

In the past week alone, the dollar index has slipped slightly, coinciding with the polls showing Trump’s lead edging forward.

Others disagree, believing that the dollar could strengthen against developing nation currencies – such as the Mexican peso – due to concerns that Trump will enable protectionist trade policies which will damage their economies.

Essentially though, as so little is known about Trump’s economic policies, the dollar could fall simply as the result of uncertainty.

As the sterling plummeted after Brexit, a “buying spree” among Asian property investors took place in the UK. A similar scenario could ensue if the dollar dropped dramatically.

More: Tell us what it’s worth to live where Donald Trump grew up

2. It could cause global recession

It gets more dramatic still.

Simon Johnson, economist at the Massachusetts Institute of Technology believes that a Trump presidency would “likely cause the stock market to crash and plunge the world into recession.”

He continued that Trump’s “anti-trade policies would cause a sharp slowdown, much like the British are experiencing” because of Brexit.

A Trump victory would most likely lead to a knee-jerk sell-off, writes the New York Times. “Many investors will choose to sell stocks and ask questions later.”

Similar warnings have been coming in thick and fast. Dutch pension fund manager, Hans Op‘t Veld, head of listed real estate at PGGM, which looks after almost USD13.5 billion in real estate equities, has advised investors to sell Hong Kong property stocks in the event of a Trump victory.

Such a result could lead to greater protectionism and impact world trade, and be as significant as the UK Brexit vote which shook up Japanese real estate stocks, he warned.

“The minute Trump gets elected I would worry about Hong Kong, not so much about the US,” he says, “China is the producer for the world, so you don’t want to be in China.”

More: The non-political reason noone wants Donald Trump real estate

3. Luxury real estate may suffer

A global survey from Mansion Global on the US election revealed that general consensus is that a Clinton vote would be most beneficial for the luxury residential real estate markets worldwide.

The survey, which was amongst brokers, listings agents and other industry experts, revealed that 83 percent of respondents favored Hillary Clinton as the best choice for the luxury real estate industry, with only 17 percent citing Trump.

On the majority side, one respondent wrote: “Her clear experience on the national and international level will provide the sense of certainty that the market needs. Donald Trump is viewed by me and many others as such a ‘Wild Card’ that he will create an enormous sense of uncertainty here and abroad and that is never good for the global luxury real estate market.”

In contrast, a Trump supporting respondent feels the “luxury real estate market would thrive because the wealthy would feel more secure that they won’t be taxed out of existence.”

More: Donald Trump behind two luxury residential towers in India

4. Anti-globalisation sentiment could hurt Asia

The Republican party has always been pro-business and pro-free trade, but this could end with Trump, who has called for American “economic independence” which includes opting out of long-standing trade arrangements.

He’s also called the Trans-Pacific Partnership (TPP), a 12-country trade deal that would encompass around 40 percent of total global output, a “terrible deal” for the U.S.

“Asia stands to lose from a reversal of globalization,” writes Kim Iskyan, editor of the Truewealth Asian Investment Daily. “If tariffs in the U.S. on goods from Asia increase, the entire relationship breaks down.”

More: Donald Trump interview – “I am hard to please and pleased when I am”

5. Commercial real estate will be hurt

Trump may be a real estate mogul, but his victory could damage the commercial real estate sector, The Street reports.

“A Trump presidency would cause more emotional investing than quantitative and there would be a tremendous amount of volatility in the commercial real estate world, primarily from the liquidity side,” said Jay Rollins, CEO of JCR Capital.

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Source: Property Report