HOW DONALD TRUMP MAY AFFECT YOUR PENSION

The election of the Republican Donald Trump as the next president of the USA may cause instability in the financial markets, where pension savings are invested. This is, among other things, due to the fact that Trump has signalled that he will limit American trade with foreign countries, says Henrik Henriksen, Chief Strategist in PFA.

”Markets and investors will become increasingly uneasy in the future, as Trump with his rhetoric and proposals to introduce taxes and penal duties on foreign goods and limit trade across national borders may trigger a fear for a trade war-like condition, where the USA continues to isolate itself. I believe that we will experience increasingly fluctuating share markets, which pension customers in the market rate will be able to see in their return," says Henrik Henriksen.
He predicts that, in particular, shares in the new emerging markets will experience a negative effect. Emerging markets include, among others, China, large parts of South America and other countries/regions that typically produce goods or sell raw material to the American market. At the same time, emerging markets are among the investments that up until now have yielded the best return this year. This may however change.

When the Americans are going Christmas shopping - not this year, but the next - they may experience that the products in Walmart have become more expensive, as they either are produced in foreign factories and a high tax therefore is imposed on the product, or because production has been moved to the USA, where expenses are higher. Global growth will lose on a decrease in trade, and it may result in more difficult conditions for creating positive returns on the share markets and thereby also on the pension savings.

”International trade has been stagnant throughout the last years, and it is an unusual development when world economy generally increases. This shows that the globalisation tendencies have stopped, and it is likely that Donald Trump will continue this trend. This is the biggest challenge, as it can curb global growth and the share markets," Henrik Henriksen says.
Donald Trump has for instance said that he will introduce penal duties on a range of imported goods, that he will end some of the USA‘s international cooperations on trade and move production and workplaces back to the USA. However, this may, as mentioned, become an expensive strategy for the Americans.
When the American population is going Christmas shopping - not this year, but the next - they may experience that the products in Walmart have become more expensive, as they either are produced in foreign factories and therefore a high tax has been imposed on the good, or because production has been moved to the USA, where expenses are higher. Global growth will lose on a decrease in trade, and it may result in more difficult conditions for creating positive returns on the share markets and thereby on the pension savings,” Henrik Henriksen says.

Facts for PFA’s customers

In PFA Plus, there are four investment profiles: A, B, C and D. All four profiles hold various degrees of risks and opportunities for return. Profiles that have the largest percentage of shares and other risky investments (Profile C and D) are likely to have the largest fluctuations when we experience things that impact the share markets, such as the presidential election in the USA. The possibility of positive returns is on the other hand also bigger in these profiles.
Customers in PFA Traditional, also called average interest rate, will in the short term not experience fluctuations on the pension savings as a result of the American election. However, over time, it may have a consequence, although it may be to a smaller degree.