Singapore’s state-owned investment firm, Temasek, has sounded the alarm about the potential economic consequences of a Donald Trump re-election. The firm’s Chief Investment Officer, Rohit Sipahimalani, expressed concerns about the long-term impact of a Trump presidency on global growth, particularly for U.S. companies and financial markets.
Despite the current market optimism, Sipahimalani believes that a Trump victory could lead to a stronger dollar, higher interest rates, and increased uncertainty due to tariffs. These factors, he argues, could create a ripple effect, impacting both U.S. markets and emerging markets.
“I know the conventional wisdom and consensus is that right now a Trump presidency is better for markets,” Sipahimalani said. “But as you look out to 2025, the picture is not that clear.”
This warning from Temasek, which manages a net portfolio value of S$389 billion ($294 billion), comes as the firm has recently shifted its investment strategy towards the U.S., planning to invest $30 billion over the next five years.
Sipahimalani further predicted that markets would experience greater volatility in 2025 compared to recent years, with potential “tail risks” being underestimated. He also highlighted the potential impact of a global growth slowdown on U.S.-listed firms, as 25% of S&P 500 companies’ revenues come from outside the United States.
“The tariffs are going to create uncertainty, which is never good for investment and actually I think it’ll be negative not just for emerging markets but across the world,” Sipahimalani stated.
Temasek’s warning aligns with a growing debate surrounding the economic impact of a potential Trump re-election. A recent survey of economists suggested that Trump’s economic policies could lead to higher inflation and deficits than those proposed by his Democratic opponent, Kamala Harris, if he were to return to office.
Despite the potential economic risks, Steve Schwarzman, CEO of Blackstone Inc., remains confident that the U.S. will avoid a recession, regardless of the election outcome. Schwarzman believes that both candidates have proposed policies that could bolster economic growth.
However, Trump’s controversial tariff plan has faced growing backlash from voters. An NBC News poll revealed that 44% of voters would be less likely to support a candidate supporting universal tariffs, while only 35% were in favor.
As Election Day approaches, the SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500, has delivered returns of nearly 14% over the past six months. Meanwhile, the Invesco QQQ Trust, Series 1 QQQ, which follows the tech-heavy Nasdaq, has posted returns close to 15%.
The potential consequences of a Trump re-election on the global economy are a significant concern for investors, businesses, and policymakers alike, as the world watches with anticipation for the outcome of the U.S. presidential election.
