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How Will the Victory of Donald Trump affect Business and Investments in UAE?

trump-affect-uae-business-marketThe Trump presidency has taken its place in the White House, but even after two weeks, the financial market is still confound and confused over their future. The initial though was the predicted collapse of stock market which sharply hit a little bit 2.5% drop, but amazingly recovered. The strange thing is the reversal of stock market with a boom as it stands on high level as compare to the past several years. The bond markets has faced gigantic move with the 10 years highest 2.35% yield on the Treasury bond. Dollar is not behind, achieving the highest trading range; it is substantially higher as compare to the past 13 years. This unexpected outperforming excellence took place due to multiple factors which collectively provided economic growth in terms of divergence.

In Dubai, an unexpected trust was appeared and investors were confident that this 2.5% dropping is temporary. Some stocks were affected but investors have firm believe that it will pass. But various investors and companies fear a Trump victory especially those who were about to setup their new business in this opportunity hub. They are worried about turmoil in trade and global economics and unpredictable policy that could influence their new venture badly.  The Federal Reserve is discouraged to raise interest rates in December.

STOCKS

After the announcement of results that a woman is not going to be the president of America, the bonds and stocks moved lower. The certainty in the upcoming month is unsure but the S&P 500 would fall by 11-13% as predicted by Barclays.

BONDS

39 basis points that is 0.39% drop happened due to Brexit vote has been recovered recently after the Trump win which is around 10 years yield. Experts are predicting that the benchmark could plunge 0.1% that is around 10 base points. There is a solid possibility of driving back of the entire drop due to the Trump policy of tax cut and infrastructure appending. The history has revealed that stock market performance improve under a Democratic leadership. After 2 years of huge loss, the energy industry bonds might recoil due to the Trump’s support for fossil fuels.

CURRENCIES

During the election results when the voting poll showed increment in Trump’s side, the US dollar started falling against euro, British pound and Japanese yen. Due to the fear of his policies this uncertainty will continue in the market of UAE.

COMMODITIES

There is a chance of price fall of natural gas and oil prices could get a lift in UAE. Investors are preferring precious metals like silver gold and platinum to invest rather than dollars.

Any rash decision by the investors in the UAE could increase the chances of market ambiguity.