Country ETFs to Gain & Lose in Trump Presidency
Donald Trump is set to be the 47th President of the United States. Trump’s victory over Kamala Harris on Nov. 6, 2024, is likely to produce a mixed response in the global market thanks to his uncertain or rather controversial trade, immigration and geopolitical policies.
Though it is too early to predict how the U.S. economy will perform during the Trump presidency, ‘Trumponomics’ — or hopes of loose fiscal policies — have injected fresh optimism among investors. Wall Street rallied in response to Trump’s victory.
Against this backdrop, we highlight below a few country-based exchange-traded funds (ETFs) that could gain or lose during the Trump Presidency.
Japan – WisdomTree Japan Hedged Equity Fund (DXJ)
The U.S. dollar touched its highest level in a year as Donald Trump won the U.S. presidential race. This led to a significant increase in Treasury yields due to speculation that his policies would maintain elevated U.S. interest rates.
The dollar’s strength weakened the yen. The Japanese yen sank to its lowest since July. This has boosted the export-centric Japanese equity gauges. Japan’s tech-heavy Nikkei 225 climbed 2.6%, while the broader Topix stock index gained 1.9% on Nov. 6. WisdomTree Japan Hedged Equity ETF DXJ should be in a sweet spot. The ETF DXJ added 2.3% on Nov. 6.
India – iShares India 50 ETF (INDY)
India appears to be in a beneficial position amid Trump’s victory. Adrian Mowat, investor in Hong Kong SAR, believes India might benefit from Trump’s return to the White House, primarily, because of the new tariffs on China that he has already promised, as quoted on CNBC. This may encourage more businesses to shift their manufacturing from China to India.
PL Capital’s analysis showed that a Trump win may lead to improved pricing for Indian generic pharma firms. Deregulation may increase the penetration of Indian generics into the U.S. market. Meanwhile, chances of lower global prices of crude and gas are positive for an import-dependent country like India. The ETF INDY was up 0.6% on the day.
Mexico – iShares MSCI Mexico ETF (EWW)
Trump said he would impose 25% tariffs on goods from Mexico. Not only trade, Mexico is likely to face initial blows on the front of migration and security, too.
Trump’s campaign rhetoric, including 200% tariffs on cars coming from Mexico, mass deportations and U.S. military action against drug cartels, puts Mexico’s president, Sheinbaum, in a difficult position. An initial deterioration in the relationship between the two countries – and a blow to the Mexican peso – is the most likely outcome. The Mexico ETF EWW initially started losing on Nov. 6, 2024, but finally recouped losses and closed the day with 1.2% gains.