As the US presidential election nears, would a Mitt Romney victory be good for markets?

YES
Nancy Curtin

A Mitt Romney victory would be a positive step for markets, given his opposition to capital gains tax increases, his support for immediate corporation tax cuts, and his business friendly, supply-side approach. We need to move away from a scenario where the government picks winners and losers in the corporate world, to one where the government acts primarily as a facilitator to businesses and individuals. Romney is well placed to achieve this. The world needs confidence and Romney will deliver an immediate sugar-high to investors through a business-led approach, more clarity on regulation and the chance to embrace the greatest opportunity that the US has to reach economic growth levels of the past. In addition, Romney’s vision of achieving energy independence for the US by 2020 could represent a monumental shift for America.

Nancy Curtin is chief investment officer at Close Brothers Asset Management.

NO
Stephanie Kretz

The US presidential election results are not a game-changer for the markets. Both candidates have different approaches to boosting growth – and both are flawed. Barack Obama believes that government spending will encourage wealth creation, but it has been proved that, in open economies, with excessive debt levels and flexible exchange rates – like the US today – government spending has close to no impact on GDP growth. Romney, on the other hand, would prefer to stimulate business through lowering corporate taxes. However, not only do corporate tax rates and real growth over a five year cycle have no correlation, but lower corporate tax rates have historically been associated with weaker growth. More fundamentally, neither candidate seems to be planning to address the US debt. As long as total debt is not reduced, all we can expect is continued weak growth, whoever is elected.

Stephanie Kretz is an investment strategist at Lombard Odier.