• Trump is the next President
• Stunning upset
• Reversal of sharp losses

What a difference a day made!

It seemed like deja vu all over again when the widely expected Clinton win failed to materialise. As seen during Brexit, the stunning outcome took the market by surprise and the natural initial knee-jerk reaction was seen by the acrossthe-board selling and almost all key indices fell including oil. As market jitters intensified, gold and safe haven currencies moved higher. However, by the time the result was officially announced, most indices were able to reverse earlier losses, having learned from the recent Brexit experience that losses and corrections are likely to be short-lived. Interestingly, the S&P500 also swung from negative to positive and closed up 1.1%. In Singapore, the STI moved from down 59 points to down 30 points by the close of trading yesterday.

Overhang has been cleared

As most markets have been waiting for this event for the large part of this year, which led to fairly cautious and lacklustre trading as the election date drew near, the removal of this overhang and uncertainty is likely to allow the market to consolidate and re-focus on other matters including corporate earnings.

Reversal seen in most markets

While the initial reaction was the sharp sell-down in equities, most markets closed above the day’s lows. For the past one month, we have shared about this anticipated volatility, especially if the scenario is a Clinton setback. However, we also viewed any sharp correction in global markets to be short-lived and that this could present as a tactical buying opportunity.

Yesterday, Trump spoke about re-uniting the country, rebuilding the inner cities, looking for common ground and also building on foreign partnerships and relationships. While the overhang has been removed, we believe that risk aversion is likely to remain, and we advocate a diversified portfolio, with focus on safe haven and good yielding stocks.

We continue to like AREIT, CapitaLand, CityDev, Frasers Centrepoint Trust, Keppel DC REIT, OUE, Sheng Siong, UOL, Venture and Wing Tai.

Source: OCBC Research - 10 Nov 2016