The odds of a Donald Trump victory appear to be weighing heavily on emerging market stocks, which have suffered their worst monthly decline since January.
What Happened: The possibility of President Trump’s proposed tariff plan being implemented is causing concern. A recent report highlighted the fourth straight day of declines in the MSCI Emerging Markets Index. This month, it fell by 3.1%.
Large companies such as Samsung, Alibaba, Tencent and Meituan have been hardest hit, accounting for more than half of the index’s decline.
With the election just two weeks away, markets are increasingly pricing in a Trump victory, according to a report from Markets Insider.
On the crypto betting market Polymarket, Trump’s odds of winning soared to 66% on Tuesday, the highest level since July, when President Joe Biden was still campaigning. These probabilities then decreased slightly to 62%.
President Trump’s proposed tariff plan suggests raising tariffs of up to 20% on imports from all countries and 60% on imports from China, investing in a harmful trade war causing concern at home.
Also read: Donald Trump beats Kamala Harris to take lead in betting market after RFK Jr. exits
Analysts at Citibank say investors are starting to move away from emerging market stocks due to increased uncertainty following the election results.
Other factors, such as escalating geopolitical tensions in the Middle East and declining bond markets, are also prompting investors to avoid riskier assets.
Why it matters: The possibility of a return to President Trump’s aggressive trade policies is causing anxiety among investors. His proposed tariff plan could lead to a harmful trade war, especially with China, and would likely have a negative impact on global trade.
This, combined with other factors such as rising geopolitical tensions and declining bond markets, is causing investors to shy away from riskier assets such as emerging market stocks.
Uncertainty surrounding the election results has exacerbated these concerns.
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