Trump Effect – Gaijinhan

Trump Effect

When Hillary was leading on the day of the presidential elections, the FX market reacted strongly with the USD gaining ground against the yen. And when Trump’s team took the lead, JPY gained aggressively bringing fears about the Japanese market. A strong Japanese yen is never a good thing for export-reliant Japan. Several major international businesses across a number of sectors saw their stock prices crash with an overly strong yen despite strong fundamentals and positive results since the beginning of the year. And with Trump’s impending victory, the yen was set to remain strong which naturally equates to a weaker Japanese economy.

However, as history has shown, hasty actions had been the culprit for stock market movements on the day of elections and they naturally return the following day when everyone regains sanity. But Trump’s victory has shown a surprisingly positive effect on the Japanese market so far with continuous gain in the USD. It appears more investors are optimistic about his upcoming policies than had been expected and the Nikkei index has been recovering since. It’s still quite some way to go before the Japan economy recovers but the movement till now had been “so far so good.”

We can’t say for sure how things will end and how things next year will go, but as far as we’ve come, Trump has gone back on his campaign rhetoric as with most politicians we have observed across the world. It is understandable though, since Trump is a businessman and he will do all he can to get what he wants. His rhetoric is eerily similar to Hitler’s, which might be why people thought he would start another world war. When Germany was in a state of mess, Hitler knew how to gain the support of the people. He created a story. A story that requires a hero to be obstructed by antagonists. Unfortunately, Jews at that time took the bullet and became the victim of his story by being portrayed as the antagonists. This story won the support of many people and the rest is history. Trump told a similar story. He blamed immigrants for committing crimes and foreigners for stealing the Americans’ jobs even though his own coats were made in countries like China and Vietnam; even though he outsourced his campaign presentation over Fiverr to a Singaporean student. It would seem then, that in his mind, he knows all these “immigrants” and “foreigners” are not really a problem. It was a story he had to tell to win the election. And after the election, the “immigrants” and “foreigners” aren’t so much of a problem anymore. In fact, they may play a crucial role in world economic recovery. He toned down on his speech. His expression looked vastly different on the day of the election compared with the days leading up to it. He stepped up and told racist people on the streets of New York to stop their unbecoming behavior against non-white people.

It’s hard to say if the good times will continue for Japan next year when Trump officially takes office. With the president-elect stating his intention to pull the US out of the Trans-Pacific Partnership (TPP), members including Japan and Singapore are worried. Japan PM Abe has said the TPP is pointless without US participation and Singapore PM Lee has voiced similar concerns.

I’ve seen memes all over the Internet taking a dig at Trump saying how he would start a WW3. But after speaking with a lawyer friend recently, I felt what he said made sense. Trump is a businessman at heart. He is only interested about money and the economy. He is not interested in war. War costs money. Hillary might start one.

I hope he’s right (not the “Hillary might start one” part).

And I certainly hope to see sustained recovery to the Japanese economy.

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