Are BRICS markets equally exposed to Trump’s agenda?

Abstract

There is no doubt that politicians exert a significant impact on stock markets. The evolving financial market volatility over the United States presidential election is a prime example of how elections have an impact on financial markets. This study assessed whether BRICS stock markets were equally vulnerable to Trump’s agenda using event-study methodology and regression-based intention votes over a period of 120 days toward the final election result on 08 November 2016. It was shown that although Trump’s win had a negative effect on some markets, it had a positive effect on others. It had the most adverse impact on China together with Brazil. Although not to the same degree as these two countries, India and South Africa were also affected negatively. These adverse reactions can be explained by Trump’s neo-mercantilist attitude, which involves cancelling trade deals and instituting tariffs. However, the effects on Russia appear to be positive due to the expectations about the easing of sanctions imposed on Russia because of the Russian role in the conflict of Ukraine.