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Investors Predict No Let Up in Market Bloodbath if Republican Candidate Donald Trump Wins

Markets fear a Trump victory could trigger global economic and political mayhem, creating massive uncertainty for investors who had been counting on a win by Democrat Hillary Clinton, whose policies were seen as more staid but predictable

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An employee of a foreign exchange trading company works in front of a monitor displaying a graph of the Japanese yen's exchange rate against the U.S. dollar in Tokyo, Japan, Nov. 9, 2016. VOA
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Investors should brace for a further slump in global stock markets, the U.S. dollar and most commodities if Republican candidate Donald Trump becomes the next U.S. president, as appeared increasingly likely Wednesday. Markets fear a Trump victory could trigger global economic and political mayhem, creating massive uncertainty for investors who had been counting on a win by Democrat Hillary Clinton, whose policies were seen as more staid but predictable.

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“If current market moves hold or go further, there is likely to be quite a bit of de-leveraging and forced selling tomorrow,” Mohamed El-Erian, chief economic adviser at Allianz, said as global markets skidded.

Trade could slump

Trump has threatened to rip up major trade agreements and impose barriers in the United States on imports from countries such as Mexico and China, which could reduce trade flows and harm sluggish global growth.

Jack Ablin, chief investment officer at BMO Private Bank in Chicago, forecast U.S. stocks could drop as much as 10 percent over the next 10 sessions if Trump is elected to the most powerful office in the world.

“Investors don’t know what he [Trump] is going to do; the policies he’s laid out have been vague and his demeanor is capricious,” Ablin said. “Foreign markets, particularly emerging markets, would take most of the brunt. These are markets that rely more on selling to us than us selling to them.”

Market turmoil could also prevent the U.S. Federal Reserve from raising interest rates as expected in December. As the chance of a Trump upset grew, global markets plunged, with some losses eclipsing the carnage seen after Britain’s shock vote to leave the European Union in late June.

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‘Horribly angry electorate’

“Whatever the outcome, this is a horribly angry electorate,” said Daniel Alpert, managing partner at Westwood Capital LLC in New York. “The markets will tank and then, those around Trump who have reasonable minds will script him with some pablum for the markets and calm them.

“But that is not the issue. The issue is that he cannot fulfill the goals of those who are in his crazy inner circle and, at the same time, truly address the interests of those who have risen up against the Washington consensus.”

The dollar, the Mexican peso and crude oil all plunged as Trump gained ground, with U.S. stock futures tumbling nearly 5 percent, likely wiping trillions of dollars of value off global financial markets, while traditional havens such as sovereign bonds, the Japanese yen and gold all rallied.

Emerging markets such as Mexico and companies related to them such as large U.S. stocks with global exposure are likely to bear the brunt of panic selling, investors forecast.

Mexico a bellwether

The MSCI Emerging Markets index plummeted 3.1 percent, its biggest one-day drop since the June 24 Brexit shock. The Mexican peso is seen as the bellwether for Trump’s chances of a victory as his policies are damaging to Mexico’s export-heavy economy. It plunged more than 13 percent to a record low as early projections put the maverick candidate with no political experience ahead.

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“We’d probably see a selloff in riskier assets, in particular emerging markets assets, particularly the Mexican peso,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C.

“We’re seeing that play out right now,” he said, “and I suspect if you see a Trump win we’d be seeing a continuation of something like that.” (VOA)

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As Bitcoin Turns 10, Its Investors Face Year-On-Year Loss

Investors who bet early on bitcoin and have stuck with it have faced a roller-coaster ride in its first decade.

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virtual currencies, bitcoin, investors
Bitcoin.com buttons are seen displayed on the floor of the Consensus 2018 blockchain technology conference in New York City, New York. VOA

Bitcoin was heading towards a year-on-year loss on Wednesday, its 10th birthday, the first loss since last year’s bull market, when the original and biggest digital coin muscled its way to worldwide attention with months of frenzied buying.

By 1300 GMT, bitcoin was trading at $6,263 on the BitStamp exchange, leaving investors who had bought it on Halloween 2017 facing yearly losses of nearly 3 percent.

A year ago, bitcoin closed at $6,443.22 as it tore towards a record high of near $20,000, hit in December.

virtual currencies, bitcoin, investors
People use a bitcoin ATM in Hong Kong. VOA

That run, fueled by frenzied buying by retail investors from South Korea to the United States, pushed bitcoin to calendar-year gains of over 1,300 percent.

Ten years ago, Satoshi Nakamoto, bitcoin’s still-unidentified founder, released a white paper detailing the need for an online currency that could be used for payments without the involvement of a third party, such as a bank.

Traders and market participants said the Halloween milestone was inevitable, given losses of around 70 percent from bitcoin’s peak and the continuing but incomplete shift towards investment by mainstream financial firms.

virtual currencies, bitcoin, investors
Transactions in cryptocurrencies occur the same way that you make transactions using any other fiat currency. pixabay

“The value mechanisms of crypto and bitcoin today are based more on underlying tech than hype and FOMO (fear of missing out),” said Josh Bramley, head trader at crypto wealth management firm Blockstars.

Growing use of blockchain – the distributed ledger technology that underpins bitcoin – is now powering valuations of the digital currency, he said, cautioning that some expectations for widespread use have not yet materialized.

Others said improvements to infrastructure such as custody services may allow mainstream investors who are wary of buying bitcoin to take positions.

virtual currencies, bitcoin, investors
Bitcoin is a cryptocurrency and worldwide payment system. Wikimedia Commons

“We see behind closed doors financial and non-financial institutions beavering away to create the infrastructure,” said Ben Sebley, head of brokerage at NKB Group, a blockchain advisory and investment firm.

Bitcoin has endured year-on-year losses before, according to data from CryptoCompare, most recently in 2015.

Also Read: Climate Change Efforts Can Be Nullified Due To Bitcoin Production: Scientists

Retail investors still account for a strong proportion of trading, market players said.

Investors who bet early on bitcoin and have stuck with it have faced a roller-coaster ride in its first decade. Many told Reuters they are optimistic that they are still onto a winner. (VOA)