Emerging markets can rest now as its time for MAGA (Make America Great Again

With the election of Donald Trump as President of USA, it’s time for MAGA (Make America Great Again) and so emerging markets can go to sleep mode.

If you look at the policies of Trump during his Presidential first term from 2016-2020, one can see that all his policies were for reviving manufacturing and industrial activities in America by reducing corporate taxes and increasing customs tariffs on imports so that more investments come to USA and economy grows. S&P 500 Index gave high average annual returns of 19% during his first term because of his economic booster policies. 

I believe that if we go by the track record of Trump and his major emphasis on resolving economic issues during his recent poll campaign then we can expect more investments going to USA market. Resources are limited and so it would be withdrawn from emerging markets and invested in USA market. This would be the trend as per my view because of strengthening of USD against major currencies. In that case, emerging markets can go to sleep or rest mode as major funds and investments are based out of USA and they would rather invest in domestic market rather than investing in risky emerging markets depriving emerging economies of much needed funds and investments. As such emerging market economies would perform worse as compared to USA and so the emerging stock markets also would decline.

In such a scenario, I would recommend gold and crypto currencies as both are favored by Trump.