“Opportunities following US election surprise”
The surprising election of Donald Trump as the 45th president of the US initially sent stocks tumbling in the world's financial markets early this morning. This can provide opportunities for a value based stock picker that dares to swim against the tide.
Before the Americans went to the ballots on Tuesday evening, the view was that Donald Trump would need to stage a historic comeback to win the White House. However, it became clear quite early on that he had enough votes to secure a victory.
The election result initially pushed down everything from US dollars to the Japanese stock markets. One of the few asset classes that rose today following the election was gold, which is usually perceived as a safe haven in troubled times.
"It is more important than ever that we keep a cool head and focus on long-term value-based stock picking," comments Investment Director Alexandra Morris. She believes that the current situation can create opportunities.
Market doesn't like uncertainty
With Hillary Clinton as president, the future political course would have mostly been clear. It is more unclear what policy stance Donald Trump will take in the world's largest economy. We may well see market turbulence for some time to come – at least until it becomes clear what having Donald Trump as president will mean for world trade and global security.
"The market doesn't like uncertainty and will likely react with volatility," explains Morris.
This was demonstrated by the US S&P 500 futures, which fell as much as 5 percent during the election night. The US stock market has not yet opened at the time of writing.
The turbulence may well be short lived however. Following the UK's surprise Brexit result on 23 June, it took only one week before the FTSE 100 was back to the same level as before the referendum.
"SKAGEN is a long-term investor and we look beyond these types of event. Our portfolio managers are now looking to see whether the volatility can create opportunities to select good companies at a low price," explains Morris.