Going overweight on US equities is going to be the call to make for many wealth and asset managers after the presidential election. 

The Dow Jones was the number to watch in Asia overnight. It rose an earth-shaking 1,508 points to land at 43,729.03. The S&P 500 also rose 146 points to a new record, although it didn't look quite as spectacular in terms of percentages or points.

Still, as everyone in the industry gets back to work after the elections, and Donald Trump's clear victory, the client call will be to go overweight US equities. In early trading, the regional equity markets seemed to reflect that very sentiment, with all the mainline Hang Seng indexes down slightly, and the Shanghai SSE largely unchanged. 

America First Policies

As an example of the tectonic shifts we are currently seeing, Lombard Odier released a CIO Office Viewpoint on Thursday presaging a clean sweep by the Republicans in Congress and American policies aimed at cutting taxes and regulation while restricting immigration and enacting new import tariffs.

The Swiss-based institution expects a pickup in inflation from the policies which should also lead to a «small boost» in growth. It will also curtail the leeway the Federal Reserve currently has to cut interest rates.

US Assets Focus

«The election result supports US financial assets, especially equities and the dollar. Treasury yields, particularly longer maturities should rise,» the bank indicated.

T.RowePrice, a Baltimore-based asset manager, for its part, believes that small caps could benefit from Trump's win although it said the outlook for the dollar remained uncertain.

Other Factors

«Although Trump has been vocal about wanting a weaker currency, some of his proposed policies, such as tariff hikes, could cause the dollar to appreciate. But other factors also will come into play, including the Fed’s easing bias and U.S. economic performance relative to other global economies,» the asset manager indicated.

Allianz Global Investors said much the same about small caps, indicating that lower corporate taxes and de-regulation «should favor» smaller US companies that have attractive market valuations.

Unpredictable Approach

«We think a Trump victory could carry more geopolitical risk than a Kamala Harris win because his geopolitical strategy involves an unpredictable approach to both his allies and foes. Expect higher trade tariffs with China and potentially some European nations,» the asset management arm of Allianz indicated.

As finews.asia previously reported, some wealth management clients are going to be potentially concerned about new tariffs and trade restrictions, particularly if they are active entrepreneurs, although Robeco head of equities Joshua Crabb expects a Trump win to drive opportunities in Asia.

Trump Again

Still, the election overnight is going to give fresh impetus for wealth management clients who are sitting on the fences given most are probably already sitting on a portfolio that holds US equities or ETFs and it will be easy to add to them incrementally. If nothing else, it will help prevent many of them from getting a bout of serious FOMO.

Moreover, the situation in the US Treasury markets is likely to be less fraught from here on out. Even though the American deficit is not expected to decline with Trump, the annual congressional budgetary impasse, which has become a global cliffhanger in the meantime, is probably going to take a breather for at least a few years.

Other investment calls

  • Pictet Wealth Management (US election special) - «We believe this election scenario supports US equities relative to the rest of the world. Beneficiaries from this scenario are likely to be financials and cash-rich companies.»
  • VP Bank (Felix Brill, chief investment officer) - «We have decided to overweight US equities. We favor the mid-cap segment, as these companies have a lower debt ratio on average than small caps and would be less vulnerable if interest rates and refinancing costs were to rise.»
  • DPAM (translated from German) - «Small cap shares and financials may profit given they were observed to do after the 2026 victory»
  • PGIM Fixed Income (Gregory Peters, co-chief investment officer) - «...the rationale exists for higher stock prices over the near term given the potential from reduced corporate taxes, but valuations are already quite stretched»
  • Schroders Investment Insights (Johanna Kyrklund, group chief investment officer) - «Trump’s victory in the US presidential election has not changed our positive stance on global equities, with a preference for US shares»
  • Wellington Management (Michael Medeiros, macro strategist) «Bond yields already have increased, and prices have dropped in anticipation of rising inflation pressures. Supply-side cuts with fiscal easing are a perfect recipe for a structurally higher level of yields and term premium.»
  • Blackrock Investment Institute - «We stay risk-on in U.S. equities, supported by solid growth and earnings. Yet sticky inflation and higher-for-longer interest rates could eventually challenge risk sentiment.»
  • Eastspring Investments (Ben Dunn, head of quantitative strategies and Michael Sun, client portfolio manager, quantitative strategies - «While elections can shape the near-term narrative, the implications for equities are more nuanced than what headlines may suggest.»
  • DWS CIO Flash (Bjoern Jesch, global chief investment officer) - «On Wall Street, the chances of a continuation of the Trump trade are good, even though we do not expect the momentum from before the election to be maintained.»
  • Franklin Templeton Institute (Christy Tan, investment strategist) - «For equities, the biggest winners will be sectors and industries welcoming a more business-friendly regulatory environment, including fossil fuel energy companies, financial services and smaller capitalization companies.»