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Trump's win a 'setback' for investors which changes the outlook for 2017: Asset manager
The election of Donald Trump changed next year's prospects for investors and was a setback for emerging market assets, the CEO of Aberdeen Asset Management told CNBC on Monday.
"We've seen a temporary setback with Donald Trump being nominated as president but I agree with the sentiment that it's a great opportunity for 2017, 2018, correcting the three, four, five years of horrible performance we've seen in the (emerging market) sector," Martin Gilbert told CNBC Monday.
"We're always going to have these structural outflows because of course we're managing closed books of business but … until the election, the U.S. election, it felt more positive than it had for some time, especially in emerging markets and emerging market equities so I was hopeful that next year was looking better," he later added.
Aberdeen Asset Management (London Stock Exchange: ADN-GB) – Europe's third largest fund house - announced Monday that it saw net outflows of £7.2 billion ($9 billion) during the three months to the end of September. However, it noted that it had seen "healthy" net inflows into emerging market equities in the final quarter with the fund house well known for its exposure to this asset class.
The election of Trump has been cheered by many investors with the Republican candidate touted as being able to stoke inflation with his polices on infrastructure investment. This has buoyed the U.S. dollar with the Federal Reserve now expected to continue to push benchmark rates higher.
A higher dollar is usually negative for emerging markets, with U.S. investors likely to repatriate their cash back home. Gilbert's comments on a "temporary setback" relate to this trend, but he remained positive that it would be a good two years for the asset class. He added that 2017 "could be construed as a good buying opportunity."
Some economists have said that a 2017 global recession cannot be ruled out given low growth in earnings. However, Gilbert said "everyone has been surprised on the upside with the aftermath of Brexit and obviously Donald Trump."
"We're also surprised on the upside, I'm not advocating a global recession in 2017, certainly not," Gilbert told CNBC.
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