The US election is set to have far-reaching impacts on economies around the globe, particularly in Central and Eastern Europe, the Middle East, and Africa. JPMorgan has analyzed four key policy areas affected by the presidential elections and discussed the potential consequences for CEEMEA equities.
One of the key policy areas is tariffs, with the possibility of a 60% tariff on China and global exports. This could limit the volumes and pricing power of mid-tech manufacturers in Central Europe and Turkey. Despite low direct exports to the US from Poland and Turkey, the interconnectedness of Emerging Europe with the European industrial sector means that the tariffs could still have a negative impact.
For commodity exporters like South Africa and MENA, the tariff policy is expected to have minimal direct impact. However, there could be second-round impacts, such as a redirection of Chinese exports to other parts of the world, which could benefit importers in MENA and South Africa.
The impact of the tariffs could also depend on the EU’s stance on imports from China. If the EU restricts Chinese imports, Central Europe and Turkey could gain share in European manufacturing. However, if the EU does not take action, these countries could see a decline in production and exports as China looks to the European market.
Another area of concern is the dollar, with a Republican victory likely to strengthen the currency. This could have different effects on CEEMEA equities, with USD-pegged MENA markets benefitting while others may face challenges. South African equities could be particularly negatively impacted by a stronger dollar, followed by Emerging European and Turkish equities.
In terms of oil prices, there are differing views on how a Republican or Democratic victory could impact the market. While a Republican win could lead to stable oil prices with potential cooperation with OPEC, a Democratic presidency is likely to continue policies that support US energy production.
The relationship between Europe and Ukraine is also a crucial factor. Trump’s approach to the Russia-Ukraine conflict could have significant implications for the region. A potential halt to military aid and a shift in policy towards Russia could create tensions within the NATO alliance and impact Ukraine’s defense and reconstruction efforts.
On the other hand, a Democratic presidency is expected to maintain ongoing aid to Ukraine and support the existing international consensus on the conflict.
In conclusion, the US election has the potential to reshape global economies and geopolitical dynamics in significant ways. Investors in CEEMEA markets need to closely monitor the outcomes and be prepared for potential market shifts based on policy changes. To stay updated on the latest news and trends in the finance world, visit DeFi Daily News for insightful articles and analysis.
