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Donald Trump's potential re-election is sparking optimism in MENA equity markets. J.P.Morgan suggests that strong US policies could boost these markets, while others may grapple with new tariffs on China.

What does this mean?

J.P.Morgan analysts believe Trump's return to the presidency might invigorate the Middle East and North Africa's (MENA) emerging markets, given a stronger US dollar, rising US bond yields, and changing global trade policies. They argue that MENA countries with currencies pegged to the dollar could benefit more than those in the broader CEEMEA region, which relies heavily on non-MENA forex. Potential tariffs over 60% on Chinese imports could significantly alter global trade dynamics, pushing up the US dollar and yields, favoring MENA markets with less exposure to manufacturing disruptions. However, for regions like Poland and Turkey, increased competition from Chinese exports might pose challenges. Meanwhile, J.P.Morgan has upgraded Greek markets to 'overweight', reflecting positive economic growth, while maintaining a similar rating for South Africa and the UAE.

The potential shift in US trade policy could create a strategic advantage for MENA equities. Investors might find value in these markets as the region's limited manufacturing base minimizes exposure to increased Chinese exports. While South Africa and the UAE remain attractive with 'overweight' ratings, Poland faces a harsher outlook with an 'underweight' rating, pressured by trade concerns.

The bigger picture: Global economic plays reshaped.

Trump's victory renews focus on his tariff-heavy policies, especially those targeting China. These changes may underpin stronger US economic fundamentals, driving up the dollar and bond yields, benefitting some emerging markets while challenging others. Investors should watch how these shifts realign economic strategies and equity market sentiments worldwide.