2016 has been a year coloured by uncertainty. With the US Presidential Election now hot on the tail of the British vote for Brexit, it is no wonder investors are feeling a little jittery.
In this post we take a look at the impact of the US Presidential Elections on Irish markets and what you can do to protect your investments.
When does the US Presidential election take place?
The US Presidential Election is scheduled for Tuesday, 8 November 2016, although the lead-up has consumed the best part of the year. Typically it is the election campaign period that sends markets into a flurry, when leadership and policies are still uncertain and widely speculated on.
Who is running in the 2016 US Presidential election?
While Hilary Clinton and Donald Trump are certainly dominating this election campaign, there are other candidates who theoretically could win the election. Libertarian Gary Johnson is the only other nominee with ballot access across all 50 states, while Jill Stein of the Green Party has ballot access in enough states to theoretically achieve the numbers she needs to become leader of the free world. That said, all eyes remain on the “big two” Clinton and Trump who went head to head in their second presidential debate on Friday 7 October.
What are the key factors influencing markets right now?
Markets like stability. The uncertainty associated with the election of a new president tends to throw markets off kilter. Typically markets fare better during presidential elections where candidates are seeking a second term and focusing their energy on policies that drive economic growth, hoping to inspire confidence in their management of the country’s finances. When faced with brand new candidates and unknown track records, investors – naturally enough – are prone to speculation, leading to the market volatility we see during an election period such as this one.
What does the election mean specifically for Ireland?
Speculation and market ambiguity affects Irish investments like any other, but history tells us that once a new leader takes office that markets tend to stabilise when policies become concrete and investors can develop strategies based on some degree of certainty.
Of course, foreign direct investment (FDI) is key among Ireland’s growth strategies and the impact of the US Presidential Elections and Brexit remains to be seen. Trump has been vocal about his annoyance with Irish government incentives given to multinationals to move jobs to the Emerald Isle, and in the wake of the Brexit the United Kingdom has recently upped the ante, pledging to reduce its own corporate tax rate to 17% by 2020. Despite this, Ireland retains its leading position for FDI thanks to its favourable corporate tax rate, highly educated workforce and as the English-speaking gateway to the EU.
The wrap-up
Naturally, the uncertainty surrounding the US Presidential Election and the Brexit will result in market jitters but it is important to stay focused on your long-term investment strategy and goals. If you have concerns about the impact of the election or the Brexit on your investments, why not give us a call to discuss your portfolio? A review of your investments can help put your mind at ease. Get in touch with Hennelly Finance on 091 670 123.
