Trump’s Debate Absence Sparks Emerging Market Selloff: Tech Stocks Plunge Amid Trade War Fears
Staff Editor Trump’s Debate Announcement Shakes Emerging Markets
Emerging market stocks are facing their worst monthly performance since January following Donald Trump’s announcement that he will not participate in a third presidential debate. This decision has significantly impacted market sentiment, with the MSCI Emerging Markets Index falling 3.1% this month.
The decline is largely attributed to increasing odds of a Trump victory in the upcoming U.S. election. Major contributors to the downturn include tech giants Samsung, Alibaba, Tencent, and Meituan, reflecting growing investor concerns over Trump’s proposed tariff plan.
Trump’s tariff proposal includes raising import tariffs to 20% across the board, with potential increases of up to 60% for Chinese imports. This aggressive stance has reignited fears of a renewed trade war reminiscent of 2018, causing investors to reassess their risk positions.
Betting markets have responded swiftly to these developments. On Polymarket, Trump’s winning odds peaked at 66% before settling slightly lower at 62%. Meanwhile, national polls indicate a tight race, with Harris at 48.7% and Trump at 48.5%.
The possibility of a Trump victory is prompting a shift towards more cautious risk positioning among investors. Citi analysts report a decrease in global EM investors’ risk appetite, noting a significant change from a month ago when sentiment favored a Harris win.
Additional factors contributing to market volatility include rising geopolitical tensions in the Middle East, a bond market sell-off, and disappointment in China’s recent stimulus measures. These elements are further exacerbating risk aversion in emerging markets.
As the election approaches, market participants will be closely monitoring political developments and their potential impact on global trade relations and economic policies.
