By Gwladys Fouche
OSLO (Reuters) -European companies that deal closely with China would be most negatively affected by a Republican victory at the upcoming U.S. election given Donald Trump has said he would hike tariffs on Chinese products, a top official at Norway’s sovereign wealth fund said on Tuesday.
Republican Trump and Democratic candidate Vice President Kamala Harris are in a tight race to win the Nov. 5 election, with a glum electorate saying the country is on the wrong track, a Reuters/Ipsos poll found.
“The Republican (candidate) is probably the one that could … exacerbate further the geopolitical tensions that we see,” Trond Grande, deputy CEO of Norges Bank Investment Management, which operates the $1.8 trillion fund, said.
“There’s more talk about tariffs and sanctions on one side than the other.”
The fund is invested in 9,000 companies globally and generally favours free trade as it is better for its returns.
“A more polarized world, where we see tariffs going up and less trade and less commerce” is thus negative for the fund, said Grande.
Asked whether Europe in particular would be negatively affected by a Trump victory, Grande said that given European companies’ extensive dealings with China, “you could see that they would be worse off with one candidate rather than the other”.
Some 27% of the fund’s investments were held in Europe as of June 30, according to fund data.
The domestic U.S. economy – in which half of the fund’s investments are located – would remain broadly the same, regardless of who wins the election, Grande said.
“The difference between a Democratic and a Republican candidate … wouldn’t be as important necessarily for the U.S.,” he said.
MIDDLE EAST
Regarding the escalating conflict in the Middle East, the fund was “definitely monitoring” the situation, from both the perspective of how it affected its holdings in the region, and more broadly “if this escalates further and becomes more of a global thing”.
Earlier on Tuesday, the fund posted a profit of 835 billion crowns ($76.41 billion) in the third quarter as falling interest rates lifted stock markets.
Its return on investment was 4.4% for the July-September period, 0.1 percentage points weaker than the return on its benchmark index.
Equities – accounting for 71.4% of its value in the quarter – recorded a 4.5% return. Fixed-income investments, which account for 26.8% of its assets, meanwhile returned 4.2%.
“The main theme was one of falling interest rates… You saw pretty much all sectors performing,” said Grande. “A good quarter for us.”
($1 = 10.9278 Norwegian crowns)