Trump win could mean more work for advisers

Advisers are being told they may have to do some extra client hand-holding if the United States elects a President Trump this year – but now could be a good time to cash in wins from New Zealand shares.

Tuesday, October 18th 2016, 6:00AM

by Susan Edmunds

Nikko managing director George Carter said geopolitical risks were becoming one of the big features of the modern investment market – alongside the US election, there is uncertainty around Russia, the stability of the European Union, and Britain’s departure from it.

“That’s something investors should be looking at,” he said. “But the role of advisers is very much to help people not make a knee-jerk, silly decision. They need to continue to make long-term, strategic decisions for their objectives. Advisers are really well-placed to help them do that.”

Mark Lister, of Craigs Investment Partners, said a Trump win would see global share markets fall by about 10%. “New Zealand would fall as well but maybe not quite so much. However, I would expect that this would probably be short-lived and we might see a recovery.”

There could also be a rise in the US dollar, which would be good for exporters here, he said, and a greater chance of a resurgence in inflation as well as increases to US interest rates.

“For long-term investors, it’s almost irrelevant. There is always uncertainly for one reason or another, and that is simply part of investing,” he said.

“We have been suggesting that existing investors take profits in New Zealand shares, because they have performed so well, and that they take advantage of the high NZ dollar and in particular add more US dollar holdings. Those recommendations make sense to us whether Hillary or Trump win the election. For new investors, periods like this of uncertainty can work in their favour, as any sell-off will create some long-term buying opportunities.”

Adviser Simon Hassan said he had been contacted by a couple of clients who were worried about what a Trump victory might mean for them.

But he said it was not something he was concerned about. “Whilst there is so much not to admire in US politics, I believe there are sufficient checks and balances around execution to prevent an ego-driven fool from achieving the mayhem that - unchecked - he could well be capable of.”

Tags: investment