Donald Trump’s victory is arguably the greatest success by a populist politician of the modern era, but will his ascent to high office pave the way for further action elsewhere?
With France and Germany set to go to the polls next year, and the outcome of the UK vote on the European Union already being bracketed as a populist win, it would appear repeat performances are no longer long shots.
Joe Amato, CIO for equities at Neuberger Berman, believes there are huge knock-on effects for political parties seeking to tap into similar feelings of disenchantment or dislocation.
‘The biggest risk, of course, is Trump tries to turn some of the more populist rhetoric of his campaign into reality. Whoever had emerged victorious today, the forces that have led to the rise of the likes of Trump, Sanders, Farage in the UK, Le Pen in France, and Wilders in the Netherlands are not going away,’ he said.
Witnessing the impact on the ground is Giacomo Mergoni, CEO of Italian investment boutique Banor Capital, who said Italy’s constitutional reform efforts are under huge scrutiny and a populist rhetoric is creeping in.
‘Italian banks shares rallied on November 9 as part of the “populism effect” spreading from Trump’s win. Investors now fear that the “no” vote will prevail at the constitutional referendum, with all the imaginable consequences for the lenders.
‘The rationale being that populism has spread in the US and UK, which means it’s more likely it will prevail also in Italy. In case of a defeat for the government, banks which postponed capital raising because of the referendum, such as MPS, will most likely have problems.’
Meanwhile, Eric Lonergan, Macro Fund manager at M&G Investments, said the US outcome strongly echoed the UK referendum vote in the sense that so-called ‘freak events’, largely driven by breaking out of perceived establishment thinking.
‘The surge in anti-establishment sentiment is definitively global. Brexit can no longer be dismissed as a freak event. It is a trend. Donald Trump’s won by defying his party, the media, and conventional politics. Populism is coming to power. The critical issue now is what this mean in practice,’ he said.
Anthony Willis, multi-manager at BMO Global Asset Management, said the US election outcome showed how both the media and political analysts were struggling to capture public opinion accurately.
‘The rise of populist parties across the western world since the financial crisis represents a huge change to the political order. This year this has come into sharper focus, first with the UK vote to leave the EU and now with Donald Trump, someone who has no previous experience of public service, taking the most important and powerful political office in the world.
‘It certainly points to an era of heightened nationalism with a pushback against the momentum in globalisation of the past thirty years from voters who feel left behind thanks to little change in their own living standards,’ he added.