To many, the results of the Brexit referendum and the recent US presidential election show the triumph of populism and irrationality over political decency.
However, there could be a deeper meaning.
In fact, both Brexit and Trump’s stunning victory demonstrate that the silent majority in Britain and the US were so disillusioned with the political establishment they were willing to give up the “known” in favor of the “unknown” to topple the status quo.
Last-ditch efforts by the mainstream media and the Democratic establishment in the US to play on the fear of uncertainty among voters, which have worked in the past, have proven futile this time, not least because the general public were so fed up with the political mainstream and desperate for change that they were willing to take a chance.
Investors around the world appear to be more philosophical about the political uncertainty brought about by Trump’s victory than expected.
The global financial market quickly stabilized and rebounded after a brief slump following Trump’s victory.
There are a couple of factors that can explain why the market remains bullish even in the face of uncertainty under Trump.
The fact that a falling pound as a result of Britain’s decision to leave the EU has significantly boosted British exports and the country’s economy is actually performing better than initially feared shows that the uncertainty factor might not be as bad as some of mainstream politicians have claimed.
Trump’s election may not be such a bad thing for the US since his pledges to substantially increase federal spending on infrastructure could serve as a powerful stimulus to the US economy and bring about true and sustainable recovery, something the Obama administration has failed to do over the past eight years.
Many believe Republican control of both the Senate and the House of Representatives will enable Trump to deliver on his election promises with relative ease.
Meanwhile, the 10-year US Treasury rate has recently topped 2 percent which shows that the market is bullish about the growth outlook for the US economy in the long run.
It appears Donald Trump’s victory has not fundamentally undermined investor optimism in the global market.
This article appeared in the Hong Kong Economic Journal on Nov. 11
Translation by Alan Lee
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