Richard Buxton, head of UK equities at Old Mutual Global Investors, speaking at today's Morningstar Conference, attended by hundreds of delegates, said professionals in the sector need to keep a close eye on developments in American politics.
With the race for the White House hotting up and Mr Trump continuing to defy the odds, it is now seen as a real prospect that the billionaire becomes Barack Obama’s successor.
Although Mr Buxton believes that ultimately Hilary Clinton will win the Presidential battle, he warned that markets may get jittery between now and the election, as polls swing one way and then the other.
Mr Buxton said: “I’m far more worried about US politics than the EU referendum over here.
“The US bookies are saying similar to us about staying in the EU, that it’s going to be Hilary but I think there’s going to be a moment leading up to November that the markets panic as they take the possibility of Trump becoming president seriously.
“I think it will be Hilary, but there will be a moment between now and November when the market panics, perhaps more than one, and that’s one to look at.
“I’d still go with the bookies with Hilary but she’s still strongly mistrusted and Congress could have an inability to do anything (if she’s elected).”
Regarding what may happen if the controversial businessman does defeat Ms Clinton, Mr Buxton said: “Who knows if Trump got in? It wont be Roosevelt but it could be a ‘new deal’, where he says ‘invest in America’, it’s worth keeping a close eye on it.”
He also expressed certainty that Britain will not leave the European Union.
The bookies have never really shifted their odds, believing remaining is significantly more likely, and polls are unreliable because people say anything to pollsters, he claimed.
Asked why he was so sure that voters will choose to remain in the EU, he said: “The British electorate are inherently conservative with a small ‘c’ and don’t vote for radical change unless there’s a crisis, such as the winter of discontent in 1973. There’s no sense of being in crisis.
“Being a leap into the completely unknown, rather than certainty of knowing what it means, I’m convinced it's something we wont do.”
Asked if voters are not going to be making their choice with their hearts rather than their heads, he replied: “They (voters) may talk emotively but when they go to the polling booth, with the element of complete uncertainty for jobs and investments in the UK, I think it’s inconceivable.
He added: “It will be fascinating to see what happens after.”
Consumer related areas of the markets would react with a bounce and breathe a sigh of relief if the UK does remain, he said.
Mr Buxton gave his views on the prevailing macro-economic issues facing investors in today’s equity markets — both on the international front and closer to home.
He said monetary stimulus is now counter productive and he described the world’s markets in recent times as an “Alice in Wonderland world that got curiouser and curiouser”, particularly referencing China.
He called for “no more monetary easing please” saying higher bond yields, without a stronger dollar, are needed.
It was not a given that the world needs more stimulus, he added.
We don’t understand why the stock market has been so nervous and volatile when it is “tough” but “not that bad”, he said.
The impact of the commodity bear market on global industrials has passed the worst, he believes.
He also said he “can say with confidence” that the “oil burn off is over despite tensions between Saudi and Iran”.
Regarding the USA, he said data from there was inconclusive but it does feel “very late cycle” and unemployment is unlikely to fall much more he believes.
He said investors can read the USA’s position as “glass half empty or half full” but Japan is in a “difficult place”.