Karsten-Dirk Steffens, CEO of Abrdn Switzerland, predicts that the US elections towards the end of the year could lead to increased market volatility.
The impending question of whether Donald Trump or Joe Biden will be the next US President is significant for Karsten-Dirk Steffens. «Typically, institutional investor activity calms down by the end of October. But I strongly expect this year to be different due to the US elections,» says the CEO of British asset manager Abrdn Investments in an interview with finews.asia.
The outcome of the election will have a direct impact on the investment sector. At Abrdn, preparations are underway to handle a potentially hectic fall season.
Trump's Return Could Stir Markets
Steffens anticipates that a Trump victory could alarm many investors: «Trump's return to the White House would be like a big bang. His polarizing nature is not well received.» This could prompt institutional investors to reconsider their portfolios in November and December.
The market has already endured a turbulent period. While 2023 was marked by uncertainty, this year has seen a recovery. This improvement is largely due to two key factors in asset allocation: a higher proportion of foreign stocks has led to better performance, and pension funds with significant illiquid investments, such as real estate, alternative investments, or infrastructure, have shown stronger results.
Shift from Real Estate to Infrastructure
This trend is evident not only in pension funds but also in investment and collective foundations. «Since the reversal of interest rates, there has been a noticeable shift from real estate to infrastructure, driven by fears of overvaluation,» explains Steffens. Additionally, there is a move towards broader risk diversification.
The US elections in early November could introduce new volatility into the market, which is not a welcome prospect for market participants. Despite this, Steffens remains composed: «We will be ready,» he assures.
