In response to the market turbulence before the US presidential election on November 5th, investors are rushing to "fortify" their global investment portfolios and withdraw assets affected by uncertainty, whether it is from large technology stocks to European government bonds. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.

Currently, Republican presidential candidate Trump and Democratic vice presidential candidate Harris are in fierce competition and are likely to propose policies that create vastly different geopolitical and world trade outlooks. Fund managers are prepared for months of volatility

Ross Yarrow, managing director of US stock management at Baird Investment Bank, said, "The market hates uncertainty, and as the poll results trend towards 50/50, this situation is becoming the most uncertain."

Trump is believed to be able to boost corporate profits in the US through tax cuts, but he may also increase import tariffs, which is bad news for European and Asian exporters as well as for US inflation.

Harris may impose stricter regulation on banks and adhere to Biden's cautious foreign policy.

The S&P 500 index fell 2.3% on Wednesday, the largest single-day decline since December 2022, as the share prices of technology giants plummeted. This decline spread to European stock markets on Thursday.

Investors are wary of further sell-offs and are looking at small-cap stocks, United Kingdom assets, and gold as possible safe havens.

Anxiety is spreading.

Trevor Greetham, head of diversified assets at Royal London, said,"We believe that the market may become more nervous about the US presidential election."

A crucial point for world markets is that investors are concerned that both candidates will use large-scale spending plans to win votes, leading to potential turmoil in the US bond market and drastic fluctuations in global stocks and bonds, whose valuations are supported by long-term US bond yields. "If both candidates indicate they will increase spending, we may find the US bond market becoming uneasy before November, which may disrupt the stock market."

"If both candidates indicate they will increase spending, we may find the US bond market becoming uneasy before November, which may disrupt the stock market." - said Trevor Greetham, head of diversified assets at Royal London.

The 30-year US Treasuries yields rose above 2-year Treasuries last week, as large investors noticed the risks of US long-term credit, and the US government's budget deficit approached $2 trillion.

Greetham said he is reducing his holdings of global stocks and has a negative stance on government bonds. Nathan Sweeney, head of diversified assets at UK asset management company Marlborough, said,"The US has a lot of debt, and our election brings uncertainty about who will govern and what spending policy they will adopt"

Sweeney said he had reduced exposure to long-term US and eurozone bonds, which face new risks if Trump cuts support for Ukraine and European countries increase their debt in defense budgets.

Adam Norris, diversified asset investment manager at Columbia Threadneedle, said emerging market stocks and bonds are vulnerable to Trump's proposed tariff increases, as higher trade tariffs would affect the economies and currencies of exporting countries.

However, Sweeney said British government bonds may perform well because Britain has experienced bond market turbulence after former Prime Minister Trass's chaotic budget in 2022 and is unlikely to venture into excessive spending again.

Stock volatility has been on the rise recently as traders switch between stock industries as election odds shift.

At the same time, the small-cap Russell 2000 index has skyrocketed, as the market bets on Trump's growth policies benefiting domestically focused companies rather than global technology firms.

The Russell 2000 index has recently outperformed the Nasdaq 100 index.

Yarrow said that if Trump's approval rating in polls drops, this rotation may collapse. He said, "The election makes the market difficult to operate, and because Harris has not yet detailed her business policies, I really don't know what 'Harris trade' will look like."

Norris said he has reduced his holdings of technology stocks due to high valuations and political uncertainty, and he is optimistic about British stocks with lower valuations. "We focus on things that we think can operate independently, steadily develop, and remain silent."

Benjamin Melman, CIO of Edmond de Rothschild Asset Management, said that Trump's potential victory has made him cautious of European exporters due to tariff risks, and he prefers smaller and less international European companies.

Gold is shining.

Gold has been soaring for months and hit a historic high earlier, reflecting increased central bank holdings and heightened tensions in the Middle East. Norris said that at current prices, gold is not a safe haven.

However, Melman of Rothschild expects that if the US budget deficit, potential trade wars, and geopolitical turmoil unsettle the dollar and broader currency markets, gold will continue to shine.

The US dollar is losing some of its features as a reserve currency, and populists are knocking on the door in many parts of the Western world.

Editor/Emily