2024 U.S. election and its impact on financial markets, UAE, and the Middle East

The upcoming election outcome could reshape international trade, financial markets, and geopolitical stability

As November 5, approaches, the world is watching the U.S. Presidential election closely. This fiercely contested race between Former President Donald Trump and Vice President Kamala Harris promises to have profound effects on global markets. With vastly different economic and foreign policies, the election outcome could reshape international trade, financial markets, and geopolitical stability.

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Trump vs. Harris: Diverging Economic Policies

Trump's Tariff Strategy

Trump's trade policies are characterized by high tariffs aimed at protecting U.S. industries. His proposals include:

These tariffs could disrupt supply chains globally, particularly impacting companies with heavy reliance on imports from China and European Union. The effects could be felt across various sectors, from manufacturing to consumer goods, as import costs rise.

Harris's Approach to Corporate Taxes

Kamala Harris's economic policies emphasize corporate taxation reforms. Key proposals include:

While these measures could impact corporate profitability and the stock market in the short term, Harris has also proposed benefits for small businesses, such as increasing the current $5,000 tax credit to $50,000, which could stimulate growth in the small business sector.

Impact on Key Sectors

Potential Winners Under Trump's Policies

Trump's policies favor certain sectors, particularly those benefiting from deregulation and increased government spending:

• Infrastructure and Defense: Trump's proposed spending boosts in these areas could benefit industrial companies and defense contractors.

• Financial Sector: Deregulation efforts might favor small regional banks and cryptocurrency mining companies.

• Energy Sector: Trump's support for fossil fuels would likely benefit traditional oil and gas companies, while rolling back green energy initiatives could disadvantage the renewable energy sector.

Additionally, Trump's experience in real estate could influence policies favorable to the industry, such as privatising Fannie Mae and Freddie Mac and easing building regulations.

Potential Winners Under Harris's Policies

In contrast, Harris's focus on clean energy and healthcare could benefit different sectors:

• Clean Energy: Harris's commitment to rejoin the Paris Climate Agreement and advocate for clean energy policies is expected to create favorable conditions for renewable energy companies.

• Healthcare: Her healthcare reform initiatives could drive growth in healthcare services and technology companies.

• Technology: With her focus on increased funding for science and technology research, the tech sector could see substantial investment.

• Infrastructure Focus: Her proposed $1 trillion infrastructure plan could significantly benefit firms in the infrastructure and industrial sectors.

• Consumer Discretionary Boost: Harris's policies to raise the minimum wage and provide tax relief for the middle class could positively impact the consumer discretionary sector.

Trump and Harris on Geopolitics and International Relations

Trump's Impact on Foreign Relations

Trump's potential return to the White House could bring back his assertive approach to foreign policy. His critical stance on NATO members' defense spending has previously caused market volatility, particularly in European equities and currency markets. Trump's pressure, however, has also led many NATO countries to increase their defense budgets, which some argue strengthens the alliance.

Harris's Vision for Global Cooperation

On the other hand, Harris has signaled her intention to rebuild alliances and foster global cooperation. Her administration could focus on:

• Climate Change: Collaborating on global initiatives, which may bolster the clean energy sector.

• Trade and Fair Labour Practices: Introducing stricter standards for trade agreements, which could reshape manufacturing costs and influence global supply chains.

• Corporate Regulations: Higher regulations could impact U.S.-based multinationals operating overseas, potentially affecting foreign investment flows into the U.S.

Implications for the Middle East and the UAE

Energy and Regional Stability

The Middle East remains a key region for the U.S. due to its crucial role in global energy supplies. Trump's prior involvement in brokering peace agreements, like the Abraham Accord, suggests that his return could bring attempts at mediating regional conflicts, such as:

• Israel-Palestine Conflict: Trump may seek to build on his previous peace efforts, potentially easing regional tensions.

• Russia-Ukraine War: Trump's business interests in the UAE and Saudi Arabia could increase real estate investments, with stocks like Emaar Group, Aldar Properties, and RAK Properties standing to benefit.

In contrast, Harris's presidency might emphasize maintaining the status quo with a focus on stabilisation and humanitarian aid, which could result in increased deal flows between the U.S. and Middle Eastern countries.

Conclusion: Navigating the Investment Landscape Amid Political Uncertainty

The outcome of the 2024 U.S. Presidential election is poised to have substantial repercussions for global markets. As Trump and Harris vie for the White House, their distinct economic and foreign policies present both challenges and opportunities for investors worldwide. Whether it’s tariff implications, corporate tax reforms, or sector-specific impacts, understanding these factors is essential for making informed investment decisions.

Investors should explore tools like the Election Portfolio Analyzer by Century Financial to prepare for potential shifts in the market and strategically align their portfolios with the anticipated changes.