Kyle Hulett, Co-Head of Investments at Sygnia

Sygnia’s Co-Head of Investments, Kyle Hulett, writes: “The upcoming US presidential election is generating significant uncertainty, but the economic policies of both major parties overlap. Neither party seems willing to engage in reconciliation with China regarding trade, and both are likely to extend the Tax Cuts and Jobs Act in some form. Despite concerns about rising national debt, the International Monetary Fund (IMF) forecasts that US debt will exceed 100% of GDP next year, irrespective of which party takes control in 2025. Both parties are expected to increase spending, which may reinforce US exceptionalism.

Under a Trump presidency, the implementation of higher import tariffs could negatively affect global growth, potentially reducing it by 0.7% according to the IMF. China and commodity markets, which impact South Africa, are predicted to underperform as a result. If Republicans achieve a ‘red sweep’, supportive fiscal policies and tariffs could bolster US growth and strengthen the dollar; however, this might also lead to accelerated inflation and delay Federal Reserve rate cuts.

Conversely, a split Congress – regardless of which party holds the presidency – would likely result in legislative gridlock, maintaining the status quo and limiting additional debt accumulation and market impacts. The election’s outcome is further complicated by public sentiment: many voters have expressed doubts about the legitimacy of the election results, and there is concern about potential civil unrest following the election outcome.”

ENDS