LONDON: Overseas investors, many of whom are creditors to the highly-indebted US government, reckon a re-election of President Barack Obama would be best for world markets even if US counterparts say otherwise.
For the second month in a row, Reuters' monthly survey of top fund managers around the world was evenly split when asked whether a win for incumbent Democrat Barack Obama or Republican hopeful Mitt Romney in the Nov. 6 presidential poll would be good for global markets.
Full Coverage of US Presidential Elections 2012 The split was clearly dependant on whether the asset manager was based in the United States or not.
Domestic funds, by and large, tend to favour Romney; overseas investors Obama. Given the outside perception of the contest in Europe at least, where surveys by pollster YouGov on Wednesday showed fewer than 10 percent of Europeans would vote for Romney if given the choice, that may not be terribly surprising.
But that shouldn't necessarily explain why supposedly hard- nosed money managers would think an Obama re-election would be better for their portfolios. So is there a something other that regional political sensibilities behind the difference of investor views?
Franco-Belgian Dexia Asset Management, for example, cited long-term uncertainty of a radical U.S. policy shift in such febrile economic times.
"(Romney's) election could lead to more political and economic uncertainties over the longer term as he would implement an ambitious tax reform, huge spending cuts, a tax plan favourable to the highest income based on a too-optimistic growth scenario that would produce uncertain effects on growth," it said in response to this week's Reuters poll. Yet, the shorter term picture is very different.
Financial market commentary across the world seems to have converged on an loose assumption that a Romney victory would be good for stocks and an Obama reelection good for bonds.
The thinking goes along the lines that Romney would dodge the "fiscal cliff" more easily by allying with a Republican House of Representatives to retain or introduce more tax cuts on business and the wealthy while slashing government spending.
By removing the fiscal uncertainty with a pro-business tilt, it is argued, corporate planning will resume with gusto and lead to a surge in pent-up capital expenditure and retail spending, a macro growth fillip and a resulting slipstream for stock prices.
Flip all that around for Obama. A deeper political divide on taxes and spending between the White House and Congress could see at least a temporary fall off the cliff, stalling growth for a period and boosting safe-haven bonds. Monetary arguments reinforce that bond picture.
A Romney team sceptical of hyper-active Federal Reserve stimuli would be unlikely to renominate Fed chief Ben Bernanke for a third term in 2014. It would opt for more hawkish, inflation-focussed chairman than a Obama-led White House.
indiatimes.com
For the second month in a row, Reuters' monthly survey of top fund managers around the world was evenly split when asked whether a win for incumbent Democrat Barack Obama or Republican hopeful Mitt Romney in the Nov. 6 presidential poll would be good for global markets.
Full Coverage of US Presidential Elections 2012 The split was clearly dependant on whether the asset manager was based in the United States or not.
Domestic funds, by and large, tend to favour Romney; overseas investors Obama. Given the outside perception of the contest in Europe at least, where surveys by pollster YouGov on Wednesday showed fewer than 10 percent of Europeans would vote for Romney if given the choice, that may not be terribly surprising.
But that shouldn't necessarily explain why supposedly hard- nosed money managers would think an Obama re-election would be better for their portfolios. So is there a something other that regional political sensibilities behind the difference of investor views?
Franco-Belgian Dexia Asset Management, for example, cited long-term uncertainty of a radical U.S. policy shift in such febrile economic times.
"(Romney's) election could lead to more political and economic uncertainties over the longer term as he would implement an ambitious tax reform, huge spending cuts, a tax plan favourable to the highest income based on a too-optimistic growth scenario that would produce uncertain effects on growth," it said in response to this week's Reuters poll. Yet, the shorter term picture is very different.
Financial market commentary across the world seems to have converged on an loose assumption that a Romney victory would be good for stocks and an Obama reelection good for bonds.
The thinking goes along the lines that Romney would dodge the "fiscal cliff" more easily by allying with a Republican House of Representatives to retain or introduce more tax cuts on business and the wealthy while slashing government spending.
By removing the fiscal uncertainty with a pro-business tilt, it is argued, corporate planning will resume with gusto and lead to a surge in pent-up capital expenditure and retail spending, a macro growth fillip and a resulting slipstream for stock prices.
Flip all that around for Obama. A deeper political divide on taxes and spending between the White House and Congress could see at least a temporary fall off the cliff, stalling growth for a period and boosting safe-haven bonds. Monetary arguments reinforce that bond picture.
A Romney team sceptical of hyper-active Federal Reserve stimuli would be unlikely to renominate Fed chief Ben Bernanke for a third term in 2014. It would opt for more hawkish, inflation-focussed chairman than a Obama-led White House.
indiatimes.com
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