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What Trump victory means for UK investors

What Trump victory means for UK investors

Near term weakness in the US dollar on the back of Donald Trump being declared US president will reverse some of sterling’s weakness, according to investment experts.

At the time this article was published, stock markets in Europe were falling as Republican Donald Trump pulled off a shock victory in the race for the White House.

However the declines were more modest than earlier futures levels had indicated.

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At 8.20am (9 November) the FTSE 100 was down 1.2 per cent and the FTSE Eurofirst 300 was down 2 per cent. 

Investment experts pointed out in terms of future prospects for the UK, the weakness of the pound has helped drive the recovery in UK sterling denominated share prices of FTSE 100 companies with large amounts of overseas earnings. 

Richard Stone, chief executive at The Share Centre, said that partial reversal will likely exacerbate slightly the impact of falls in headline UK indices such as the FTSE 100.

But Ohio-born Jean Liggett, chief executive of UK's Properties of the World, said Trump's victory may well prove beneficial for the UK property market, as investors seek to migrate their portfolios from the US to a more secure and predictable market - the UK. 

She said this may even mean that the sterling could increase in value. 

Ms Liggett said: “Under Trump's stewardship, 'predictable' may need to be removed from the US English dictionary for the next four years. 

“Only time will tell how the US property market - and others around the world - respond to his election victory."

In terms of what advisers should tell investors, Michelle McGrade, chief investment officer at TD Direct Investing, said there will be lots of political noise over the coming days that may cause your clients to question their investment decisions.  

She said: “While it is good to review your portfolio at these times of heightened volatility, it is important not to make any rash decisions. 

“When markets fall they usually represents opportunities to buy not sell. And though this may be a shock, there is time to think and plan.

“The market volatility following Trump’s victory will lead to short-term trading opportunities so it will be worthwhile having some cash available to make the most of these; should this fit with your investment strategy. 

“But the longer-term investor should hold their nerve and see how the dust settles.”

emma.hughes@ft.com