Business Insider: Prospects of Trump's US presidential victory send selling off in emerging stocks

Emerging market shares are falling as Republican Donald Trump's chances of winning the US presidency increase, and with them the likelihood that his tariff plan will be implemented, Business Insider writes.

The MSCI Emerging Markets index is heading for its biggest monthly decline since January, having, at mid-session late last week, fallen 3.1 percent from early October levels. Important names in the index, such as Samsung (-9%), Alibaba (-13%) or Tencent (-5%) suffered among the most important declines, providing about half of the decline of the share basket, according to the American publication.

Two weeks before the election, Trump's odds of victory had risen to 66 percent, according to prediction and betting site Polymarket, the highest since April, when his opponent was Joe Biden. At the end of last week, they had fallen slightly to 64%. On the other hand, opinion polls show a much tighter fight, with the latest national average compiled by RealClearPolitics showing Harris with a 48.7% chance of victory, compared to 48.5% for Trump, writes Business Insider.

According to the American publication, former President Donald Trump has proposed raising tariffs on imports from all countries by up to 20%, while imports from China will be subject to tariffs of 60%. Investors' fears of a trade war are not unfounded, as in 2018 the US President's trade war with China resulted in emerging market stocks significantly underperforming those in the United States.

Now, strategists believe the election is once again driving investors away from emerging markets as uncertainty rises. "The US election has become a key driver of uncertainty, with risk attitudes clearly moving towards a more cautious stance. In our recent interactions with clients, we sensed that the appetite of global emerging market investors to raise investment budgets in risky assets may be significantly reduced," Citi analysts wrote in a note published in mid-October.

According to the strategists, market sentiment was very different from a month ago, when investors were expecting higher earnings chances for Harris. "There has been a significant change in investor sentiment, so probably budgets (not for risky assets) have changed accordingly," Citi said.

Other factors, such as intensifying geopolitical tensions in the Middle East and a sell-off in bond markets, are driving investors away from riskier assets, Business Insider also writes.