Steve Brice, Global Chief Investment Officer at Standard Chartered Bank’s Wealth Solutions unit has noted the likely impact the 2024 United States of America (US) presidential election will have on the global economy, including the Nigerian business landscape.
In a press statement, Brice has in a report outlined the anticipated effects of the 2024 US presidential election on the global economy, including the Nigerian business sector.
Brice said with the election set for November, analysts are closely monitoring potential outcomes and their impacts on the international business environment.
He noted that the recent debate and last weekend’s assassination attempt on former President Donald Trump has heightened the stakes in the election, which once again sees Democratic Candidate President Joe Biden facing off against his Republican rival, Trump.
He said as the momentum builds, the global economic landscape, including Nigeria’s, is expected to experience significant shifts depending on the election results.
“The report expects a tight contest based on recent polls while dwelling on the impact fiscal policies would have on the global trade terrain, of which the Nigerian business climate is a part based on foreign exchange rates and the economy’s dollar-dependent nature,” he said.
“The question for us, though, is to what extent should investors care. Let’s break this question down into two parts: before and after the election. If we look at history, the second half of an election year is normally still positive for the US stock market, despite the risk of increasing volatility just before the election. This suggests that significant political uncertainty is not normally the dominant driver for investors,” Brice said.
He said the bank see inflation moderating in the second half of the year, with upside inflation surprises already starting to fade.
According to him, this should allow the Fed to start cutting interest rates in the second half of the year and bond yields to decline.
The Standard Chartered Bank chief said the indices are projected to become more complicated after the election, affecting earnings from equities which have recovered strongly in recent weeks and currently outperforming expectations.
His three main scenarios are captured thus: a clear Biden victory, a narrow Biden victory, and a Republican clean sweep noting that the first outcome would mean the fiscal policy will likely remain tilted towards high spending and raising taxes on the wealthier segments of society and continued sponsorship of the decarbonisation agenda.
The second scenario would mean dramatic policy changes are unlikely while a clean sweep for the Republicans would minimise political uncertainty but could see radical shifts in economic, trade, immigration, and geopolitical policies.
“Making predictions based on political outcomes is always risky. Remember 2016 when the overwhelming narrative was that a Trump win would be bad for equities.
On confirmation of his victory, the stock market dipped intra-day, but then rose over 30% in the next 14 months,” Brice continued.
“It is important for investors not to overreact based on personal political biases or rhetoric. Elections, especially emotionally charged ones, make investment decisions more challenging.
However, I believe the best approach is to stay invested through the uncertainty and look for opportunities to add to diversified portfolios if we see short-term weakness,” he said.
