Prepare for November

The US election can trigger bouts of volatility, and we think investors should manage risks accordingly. In equities, the US consumer discretionary and renewables sectors would be at risk in a “red sweep” scenario. We would see more potential upside in financials in that scenario. Investors should consider strategies to help hedge risks in sensitive stocks and sectors that we have identified, as well as currencies such as the Chinese yuan. We also think that gold can act as an effective hedge against fears of geopolitical polarization, inflation, or excessive deficits.

Equity sectors

We think investors should manage their exposures to the US consumer discretionary and renewables sectors, both of which could suffer if a “red sweep” scenario materializes. The consumer discretionary sector may be at risk if trade tariffs are imposed after the election, while the renewables sector could receive less government support. US financials, on the other hand, may stand to benefit from lower regulation in a “red sweep” scenario.

Defensive structured investments

The US election in 2016, when Donald Trump was elected, led to divergent outcomes, and while the assets affected may differ this time around, we expect volatility. We have identified a series of stocks across sectors that would likely be affected by a Trump or a Democratic presidential win. To help manage the potential volatility associated with the outcome, strategies that investors can employ for single stocks or cyclical sectors like energy, industrials, and financials include capital preservation strategies or yield-generating strategies.

In terms of currencies, investors should also consider hedging their Chinese yuan exposure, going long the USDHKD with 1-year and 2-year forwards (as the peg remains intact), and managing their Mexican peso exposure.


We have a most preferred view on gold. Concerns about geopolitical polarization, inflation, the US fiscal deficit, and Fed independence could all help gold prices. In our base case, we forecast gold prices rising to USD 2,600/oz by the end of the year and USD 2,700/oz by mid-2025, driven by likely lower US rates (which we expect to spur exchange-traded fund demand), political uncertainty, and continued central bank buying.

On average, the gold allocation of developing countries’ reserves is about half the level seen in developed markets’ central banks, according to data collected by the World Gold Council from the International Monetary Fund’s International Financial Statistics division. Moreover, the World Gold Council’s latest Central Bank Gold Reserves survey found that 29% of central banks intend to increase their gold reserves over the next 12 months, the highest level since the survey began in 2018. As an example, the Polish central bank has communicated that it plans to increase its gold allocation from 13% currently to 20% by the end of 2025.

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