What Does The US Presidential Election Mean For Investors – Part 1

Credit: Gage Skidmore

And so we’re down to two.

Although there is still some time before the nominations can officially be confirmed, the world would most likely be seeing a Hilary Clinton and Donald Trump showdown for the US Presidential Elections held later this year. Clinton’s the nominee for the Democratic Party while Trump’s from the Republican camp.

So, how do the two candidates differ in their views? For investors – even those of us in Singapore – it might be worth thinking how each of their economic policies could impact the global business landscape.

Here are some ideas on where the world’s largest economy might be heading, depending on who wins the election. It’s a two-part series, so let’s look at some of Trump’s policies here. For Clinton’s, you can check out here.

Trump’s Tax Reform

Trump wants to bring jobs back to the US – jobs that he claims are being taken away by developing nations such as China. His proposal to bring back jobs to the country include a tax plan, which has four simple goals. In his own words, they are:

“1. Tax relief for middle class Americans: In order to achieve the American dream, let people keep more money in their pockets and increase after-tax wages.

2. Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let everyone keep more of their money.

3. Grow the American economy by discouraging corporate inversions, adding a huge number of new jobs, and making America globally competitive again.

4. Doesn’t add to our debt and deficit, which are already too large.”

Basically, Trump hopes he can make the US an even more attractive place to do business by lowering the taxes for all American taxpayers and companies, and by simplifying the tax code.

Reforming US-China Relations

Trump also feels that China has been unfair to the US, when it comes to trade, and he has plans to correct that. According to his policies on US-China relations, Trump hopes to, in his own words:

1. Bring China to the bargaining table by immediately declaring it a currency manipulator.

2. Protect American ingenuity and investment by forcing China to uphold intellectual property laws and stop their unfair and unlawful practice of forcing U.S. companies to share proprietary technology with Chinese competitors as a condition of entry to China’s market.

3. Reclaim millions of American jobs and reviving American manufacturing by putting an end to China’s illegal export subsidies and lax labour and environmental standards. No more sweatshops or pollution havens stealing jobs from American workers.

4. Strengthen our negotiating position by lowering our corporate tax rate to keep American companies and jobs here at home, attacking our debt and deficit so China cannot use financial blackmail against us, and bolstering the U.S. military presence in the East and South China Seas to discourage Chinese adventurism.”

What will change

In looking at Trump’s policies, it appears that the US could possibly be moving toward protectionist economic policies that are focused on protecting US industries against foreign competitors rather than on improving global trade.

This means that exporters to the US might be facing some uphill challenges, if Trump does become president. Moreover, if the US was to employ protectionist policies, there might be serious consequences for the Chinese economy. Thus, companies that support the Chinese economy could also be affected.

Companies that may be buffeted by such developments include Global Logistic Properties Ltd (SGX: MC0), which has sizeable portfolios of logistic properties in both China and the US, as well as others such as Wilmar International Limited (SGX: F34) and Genting Singapore PLC (SGX: G13). The latter two companies depend greatly on the spending power of Chinese consumers.

But all that said, what a politician says can at times be very different from what a politician does. This is something investors might want to keep in mind too.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns shares in Wilmar International Limited.