Foreign Financial Folk Turn Bullish On Trump

As initial shock subsides,Asian and European financial pros are taking a more hopeful view of the president-elect's potential policies andimpact on the world economy.

August 2015: Donald J. Trump, Hary Tanoesoedibjo & Liliana Tanoesoedibjo announce a deal for Trump’s first hotel in Asia, to be built in Bali. (PRNewsFoto/Trump Hotel Collection)

As the reality of a Donald Trump presidency sinks in with the world’s markets, financial professionals and economic groups are choosing to look at the stimulus that could result from the election of the real estate developer turned reality show star.

East Asian financial pros are “mainly positive” about the upcoming Trump administration, according to a report today by deVere Group, an independent financial advisory organization.

Participants in the study cited tax cuts and deregulation as sources of stimulus that could drive growth after Trump takes office in January.

“Whilst many of those surveyed may hold wildly different political views to the president-elect, the consensus is mainly positive about the Donald Trump presidency,” said Doug Tucker, deVere Group’s head of East Asia, in announcing the findings.

The report comes a day after the Organization for Economic Cooperation and Development (OECD) raised its outlook for the US economy. The Paris-based group even appeared to suggest that other parts of the world could stand to adopt policies more akin to those Trump has espoused, such as tax cuts and infrastructure projects.

“The global economy remains in a low-growth trap, but more active use of fiscal policy will raise growth modestly,” the OECD said in its presentation. It projected that US GDP growth would accelerate from 1.5% this year to 2.3% in 2017 and 3.0% in 2018.

To take the temperature of East Asian markets, deVere Group turned to its affiliates Acuma Hong Kong and deVere Shanghai, two of the strongest financial marketplaces in the region. Students interviewed more than 650 study participants, including hedge fund managers, bank executives and the operators of small and mid-sized enterprises that provide professional and support services.

More than two thirds of respondents acknowledged that they were surprised by the outcome of the election, but almost as many said they expect Trump to have “a positive effect” on their assets in the medium term.

In interviews, the financial pros said they expected the US banking sector to do well, as Republicans in Congress press to roll back financial regulation. They likewise said the energy and mining sectors will benefit from a reduction of environmental rules, and the pharmaceutical industry will surge if the GOP has its way with Obamacare.
The sudden bullishness on the Trump administration is a reversal from six months ago, when Moody’s Analytics fretted that his policies could lead to a “diminished” US economy, with immigration restrictions boosting labor costs, trade tactics raising the cost of imported goods, and deficit spending that would cause the federal debt to balloon.

Even before any of this unfolds, the US economy is showing increasing signs of strength. The Commerce Department raised its estimate today for GDP growth, estimating an expansion at a 3.2% annual rate in the third quarter, up from its earlier estimate of 2.9%. Growth was pegged at 1.4% in the second quarter.