Should traders turn to US elections safe haven JPY?


Will you be sitting out the US elections turmoil or trade on the volatility? If the latter, don't forget the Japanese Yen. Should traders turn to US elections safe haven JPY to hedge risks?

7 November, AtoZForex – With the announcement of the FBI decision not to impose any criminal charges on Hillary Clinton, stocks have gone up together with the dollar. Now, fund managers view the Japanese yen as the safest bet in Asia, at least for the short term. According to Mary Nicola, the investment strategist at Aviva Investors Asia:

"If Trump wins, you'll get risk-off sentiment and you'll see the dollar losing against the Swiss franc, yen, and euro. If you get a Clinton win, you will get a relief rally in markets so you could potentially see dollar weakness."

The price of gold has seen an increase of 3 percent.The stock of Newcrest Mining, an Australian based company, has increased by 13 percent in a month. In case Trump is elected, fund managers believe shares will see a further increase.

US elections safe haven JPY: what is advised to investors if Donald Trump wins?   

Mark Wills, managing director and head of investment solutions group State Street Global Advisors in Sydney, said that currencies that are highly connected to trade cycle would be most likely negatively affected if Trump wins. Hence, Some investors are holding short positions in South Korea's won, China's yuan and the Malaysian ringgit. As these currencies are vulnerable to moves in risk appetite.

Citi analysts commented last week:

"Our global base case for a Trump presidency would, therefore, be a stronger U.S. dollar, weaker equities, weaker commodities, and an unclear direction of U.S. Treasuries".

Thereby, analysts at City advise buying the Japanese yen, while shortening the Korean won. In addition, the currency strategist at ING London, Viraj Patel anticipates the Korean won to decline by 6.5 percent to 1220 per dollar if Trump is elected. Societe Generale advises buying stock in China and Southeast Asia as these markets are less correlated to global market sentiment. Furthermore, the French bank would sell some technology companies including TSMC Technology, Advanced Semiconductor, Infosys, Tata Consultancy Services, Hong Kong's Li & Fung and Japan's Fuji Heavy Industries.

Societe Generale advises buying stock in China and Southeast Asia as these markets are less correlated to global market sentiment. Furthermore, the French bank would sell some technology companies including TSMC Technology, Advanced Semiconductor, Infosys, Tata Consultancy Services, Hong Kong's Li & Fung and Japan's Fuji Heavy Industries.

In case Trump wins, it is also advised to invest into Asian defense companies, including Australian firm Austal, China Shipbuilding, AVIC Aircraft, AviChina, Bharat Electronics and Mitsubishi Heavy Industries.

In which instruments should traders invest if Hillary Clinton is elected? 

Jeremy Lawson, chief economist for Standard Life Investments, stated that:

"If Clinton wins, emerging markets will see a lot more of a green light for capital flows at least for a short period of time”.

Also, it is recommended to buy north Asian renewable energy shares such as stock of Taiwan’s Motech Industries. Furthermore, if Hillary Clinton wins assets of emerging markets should recover.

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