Renaissance Capital (RenCap) analysts have predicted that, if Joe Biden US Democratic Party presidential candidate win US election, will attract $700 billion investments to Nigeria and other emerging markets.
In a report to investors titled: "Biden’s victory, trillions into EM and lockdown", which was released on Thursday, RenCap Chief Economist, Charles Robertson said a Biden victory will, in the long run, shift trillions of dollars to Nigeria and other emerging markets.
Robertson explained that if that happens, many people will wonder why this election race was tight.
On the outlook for Nigeria and other emerging markets, he argued that U.S. President, Donald Trump’s possible defeat is good for emerging markets.
He said global investors will start re-allocating cash to emerging markets in a big way. "The stock of Africa’s Eurobonds only topped $100 billion in 2018, and even if it is only Blackrock’s actively managed part of the business more like $2 trillion in all asset classes (perhaps $700 billion in fixed income), that starts to shift to Emerging Markets this could be very helpful.
"Our base case is that Foreign Direct Investment will stop being a net positive for the US due to Trump’s defeat, and portfolio flows will also go to EM, and together, these will drive the $ gradually weaker in coming years," he said.
Robertson said this becomes a self-reinforcing cycle of emerging market forex appreciation giving good returns to dollar investors, which in turn attracts more money to emerging market and in turn pushes emerging market forex stronger.
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