President-elect Donald Trump set out an ambitious anti-globalisation foreign policy agenda on the campaign trail – from his infamous pledge to make Mexico pay for a dividing wall and labelling China a currency manipulator to casting doubt on NATO and praising Russia.

Whether he will be able to push his controversial agenda through Congress, and the reaction from the affected countries, remains to be seen. Emerging market investment managers set out their predictions for the months ahead.

Michael Levy, frontier and emerging markets investment director at Barings, discusses the implications for emerging and frontier markets:

Investors will be in the process of attempting to differentiate between Trump’s actual policy positions and his more outlandish statements. There are foreign policy implications for agreements such as the recent Obama-sponsored deal with Iran. NATO’s current status could be called into question and contributions by member states may need to be amended, which could have a negative impact on Eastern European countries.

Across the Mexican border, there is likely to be a great deal of apprehension. Mexico’s reliance on the US could see it disproportionally affected. Almost a third of Mexico’s GDP relies on its northern neighbour and Trump’s promise of a 35% tariff targeted at US companies that outsource abroad could be costly, particularly for the automotive industry. Trump has mentioned plans to renegotiate NAFTA. The loss of US-Mexico remittances is possible – these amounted to $25bn in 2015, 2% of GDP, although this decrease may be mitigated in pesos. A weak peso could also provide something of a boost to domestically-focused companies.

Much of Trump’s ire has been directed at China undercutting the American worker. This rhetoric culminated in talk of 45% tariffs against Chinese exports, a move that could start a trade war. The global supply chain, which is highly interconnected in the IT and automotive industries, would also suffer greatly and is already facing disruption after the UK Brexit vote. We should note that trade policy can be changed by executive order – Congress may not be able to intervene. In a trade war, Chinese authorities would likely act to stimulate demand, but the Chinese equity market, which has performed well in recent months, could become increasingly volatile.

Perhaps the greatest beneficiary, Russian relations with the US will now undoubtedly improve. We will possibly see a reduction in sanctions in the coming months, allowing Russian businesses to more easily finance themselves. This should provide a boost to Russian companies’ prospects and may present new opportunities among Russian equities.

Monica Defend, head of global asset allocation research, Pioneer:

The US election outcome may lead to increased interest rate volatility which may weigh on EM currencies, while a strong shift to protectionism may also hurt many export-oriented EM companies, not only in Mexico.

We believe Trump's policy agenda – although still unclear – may be bearish for income-related investments and could lead to a steeper yield curve.

We think gold is a key structural hedge against additional spikes in volatility and recommend a focus on active management, an overweight to quality assets and believe an emphasis on downside risk mitigation will be crucial in the next few months.

HyungJin Lee, head of Asian equities at Barings, discusses the impact on Asian equity markets:

If short-term uncertainty creates a risk-off environment for traditional risk assets, such as emerging market equities, there could be opportunities to accumulate long-term, fundamentally strong names at lower prices. In this volatile environment, we continue to seek and find growing companies that we believe will outperform in almost all economic scenarios. 

If Trump’s victory creates longer-term volatility that causes a significant flight to safety to assets such as the US dollar and/or gold, then the Indonesian and other Southeast Asian markets and currencies could be negatively impacted, as has been the case in the past. We are aware that such a scenario is plausible. Although Trump’s administration could negatively impact US/China relations, we believe other factors, such as the secular slowdown of China’s economic growth, the weak Renminbi and the rebalancing of the country’s economy toward a consumption-driven paradigm will have a greater long-term impact on China and other Asian equities.

We remain confident in the long-term strong growth outlook for Asia. Though the US economy is still the largest in the world, and important to the fundamental outlook of Asian companies, we note that Asia ex-Japan’s weighting of global GDP continues to climb. 

Nigel Green, founder and CEO of deVere: 

Buckle up for a bumpy ride in the global markets. The markets’ main concerns include Trump’s protectionist policies, focusing on potential trade wars with China – America’s largest trading partner – and with Mexico, it’s third largest. With Trump having said certain countries are ‘cheating’ due to their undervalued currencies, currency tensions should also be expected.

Whilst some people are put-off investing because of volatility, many of the most successful investors welcome it. Fluctuations can cause panic-selling and mispricing. High quality equities can then, for example, become cheaper, meaning investors can top up their portfolios and/or take advantage of lower entry points. This all, in turn, means greater potential returns.

As ever, the best way to benefit from the inevitable key opportunities and sidesteps risks is through real diversification – this includes across asset classes, sectors and geographical regions.