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Hans Goetti, Chief Strategist, Middle East & Asia at Banque Internationale À Luxembourg
Nov 04, 2016 | Source: CNBC TV 18
Run up to November 8 (U.S. Elections) : Of course the volatility will increase in the next few days because markets are or were, at least up till now, pricing in a Clinton victory and now with the opinion polls showing that the race is tightening, there is a lot of uncertainty. We have seen in the case of Brexit, opinion polls can be misleading sometimes. Market positioning can be one way and then when the opposite happens of course you can have a huge sell off. We don’t expect that in this case but at the moment markets are rattled just by the possibility of something happening that they have not priced for right now. So, we are going to see a little bit more volatility up to the election.
If Hillary Clinton becomes President : It will depend whether she gets elected and second, what the shape of Congress will look like. The way things stand right now, the probability is high that the Republicans will retain the House of Representatives but if Hillary wins and as a Democratic sweep off both houses of Congress, that of course is something that market is not pricing in either and that will be a surprise as well and I think it will reflect itself in which sectors are preferred right now.
When Hillary wins usually the healthcare sector tends to come on under pressure because she is in favour of price controls on drugs and so on. We don’t think that there is huge upside potential if she wins. If the market expectations are met then we will probably see the focus shifting on the Fed rate hike in December..
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