DONALD Trump’s victory in the United States presidential election set off a tidal wave of selling across emerging markets, taking equities to three months low as Mexican peso led massive currency falls.
Trump, feared by markets because of his controversial views on trade, immigration and taxation, pulled off a stunning upset, sending markets into a tailspin in early trading.
Some of the early losses were pared but the flight to safe-haven trades remained undeterred.
Mexican assets were at the forefront of selling, with the peso plunging as much as 13 per cent at one point before snapping back to trade around nine per cent.
Europe-listed equity exchange-traded funds (ETFs) slumped as much as 10 per cent
The Mexican Central Bank, which said a Trump presidency would hit the country “like a hurricane”, is expected to raise interest rates by 150 basis points to protect the currency.
Other moves were more muted as the dollar weakened against major currencies, although trade-reliant Asian markets lost heavily, with the Philippine peso falling to a seven-year trough.
“The uncertainties surrounding the future economic and political outlook of the world’s biggest economy will likely cast a long shadow over emerging markets,” HSBC chief EM economist Murat Ulgen said.
“Trump victory is a game changer for EM.
“Risk aversion will likely cause EM financial stress to rise,” he added.