Singapore’s state-owned investment firm is warning that a Donald Trump election victory might not necessarily be a plus for the world economy and financial markets.
A Trump administration would lead to slower global growth that would eventually affect US companies, according to Temasek International’s Chief Investment Officer Rohit Sipahimalani.
“I know the conventional wisdom and consensus is that right now a Trump presidency is better for markets,” Sipahimalani said Tuesday in an interview on Bloomberg Television, citing hopes for lower taxes and more deregulation. “But as you look out to 2025, the picture is not that clear.”
Investors around the world are on edge ahead of next week’s US presidential election. A victory for Trump would be more beneficial for investors holding stocks and Bitcoin relative to his Democratic opponent Kamala Harris, according to the latest Bloomberg Markets Live Pulse survey.
Sipahimalani said that while a Harris win would be beneficial for emerging markets, the opposite is likely under a Trump victory.
“A Trump win is probably going to mean a stronger dollar and higher rates than you would otherwise have in a Harris administration,” he said. “The tariffs are going to create uncertainty, which is never good for investment and actually I think it’ll be negative not just for emerging markets but across the world,” he said, adding that it would “impact global growth.”
Temasek is one of the biggest state-owned investment firms in the world with $389 billion in net portfolio value. In recent months it has embarked on a marked shift in strategy, deploying more capital in the US, where it recently unveiled plans to invest US$30 billion ($39.74 billion) over the next half decade. Even so, Sipahimalani predicted markets will be choppier in 2025 than they have been in recent years.
He said that markets were greatly underestimating “tail risks,” which refer to events that have a lower chance of happening but result in outsized impacts if they do. A slowdown in global growth would also have a direct impact on US-listed firms given that 25% of revenues at S&P 500 companies come from outside the country, the CIO added.
On China, Sipahimalani reiterated his prior comments that the way Chinese authorities deploy fiscal stimulus is far more important than the amount of cash to be spent.
“Whatever policies the government does right now, they will need to iterate a few times before they get it right,” he said, citing questions over the willingness of officials to take risks and other structural issues. “The next one year will be bumpy and it’s going to be more of a trading market.”
