Trump’s UK visit: and our investment trump cards

It’s perhaps no surprise that Donald Trump’s visit to the UK is creating more than a few headlines. Jumping from trade wars to trade deals, ‘good’ potential prime ministers to ‘negative’ ones, the US president has been creating waves.

Here we take a look at some of the items on his agenda and highlight funds that could be an investment trump card.

1. Trade tariffs

Never far from the top of his agenda is China and trade tariffs as Trump looks to put “America first”.

The world’s two largest economies have been in an escalating conflict over trade for the past year, but the issue was reignited again last month when Trump increased tariffs once more and tightened trade restrictions on Huawei, the Chinese telecoms giant – which resulted in Google suspending its dealings with the company and raised questions over Huawei being able to expand internationally.

Investment trump card: Martin Lau, manager of First State Greater China Growth says that: “In today’s environment, where market volatility and uncertainty abound, the most important criterion for successful long-term investing is a focus on quality – quality of management, quality of franchise and quality of financials.

2. Brexit

As the 31 October deadline approaches for the UK to agree a Brexit deal, Theresa May reminded Donald Trump he suggested she sued the EU. At a joint press conference she said: “The president (last year) suggested that I sued the European Union, which we didn’t do. We went into negotiations and we came out with a good deal.”

Trump replied “I would have sued, but that’s OK. I would have sued and settled, maybe, but you never know – she’s probably a better negotiator than I am.”

Investment trump card: The EU may be next on Trump’s list after China in terms of trade wars, but after 30 years and more than 15,000 discussions with companies about their prospects, Graham Clapp, manager of RWC Continental European Equity fund says he is finding more good opportunities than ever.

The top three countries in terms of weighting in the fund are currently France, Germany and Switzerland*.

3. Healthcare

President Trump said the US was committed to making a “phenomenal” trade deal with the UK as it leaves the EU. He also said: “When you’re dealing in trade everything is on the table so NHS or anything else, a lot more than that, but everything will be on the table, absolutely.”

The Health Secretary took to Twitter to reply: “Dear Mr President. The NHS isn’t on the table in trade talks – and never will be. Not on my watch. Matt Hancock”

Investment trump card: Polar Capital Global Healthcare Trust co-manager, James Douglas, highlighted on our recent podcast, that Trump’s healthcare agenda and indeed that of any presidential hopeful, could be a risk for the sector in the coming months.

But he also points out the holy grail for all governments in an aging world is to provide more healthcare, for more people, for less money. He said: “We believe those companies that can develop innovative and differentiated therapies can still be commercially successful in the U.S.”

4. Climate change

Trump has famously questioned scientists on their views of climate change, suggesting they are politically motivated. He has rolled back environmental regulations, pulled the United States out of the Paris climate accord, and is not expected to complete the rollback of the most significant federal effort to curb greenhouse-gas emissions, initiated during the Obama administration.

Having received a letter from 250 academics, saying Trump’s “reckless approach [to climate change] is a threat to the whole world”. Theresa May is set to raise the issue with him during his visit.

Investment trump card: Thankfully, while Mr Trump is America’ s leader, many of his countrymen aren’t following his lead. As Rathbone’s Julian Chillingworth pointed out recently: “Mr Trump champions coal, has little care for the environment beyond a golf course, and dismisses climate change as a myth cooked up by the Chinese. But a recent Yale poll shows three-quarters of Americans accept the reality of global warming and they are becoming increasingly concerned about humans’ effects on the planet.

“This chimes with what our Rathbone Global Sustainability manager, David Harrison, noticed when he visited the US earlier this year. Suddenly, American company managers were talking about sustainability and its growing importance among their customers. As David says: “If American companies – some of the most profit-focused businesses on Earth – can be swayed to become sustainable, anyone can.”€

5. The Mexican wall

Finally, there’s the $1 billion Trump now has to spend building a wall to separate the US from Mexico.

Having made the money available by declaring a state of emergency, the infrastructure project is yet to start, but will no doubt begin before the presidential election campaign kicks off later this year.

Investment trump card: Devan Kaloo, who heads up the team behind the Aberdeen Latin American Equity fund said to us recently that while Mexicans don’t like the idea, they understand that it is an issue for the US domestic ‘audience’ and actually has little impact on the economy.

More important in this respect, was making sure their own trade deal was finalised – which has happened. The fund currently has around a quarter of the portfolio invested in Mexican companies*.

 

*Source: fund factsheets 30 April 2019

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.