While the embarrassingly protracted U.S. elections have made the American political system the butt of jokes worldwide, its effects on international markets might not be a laughing matter.
"What we have seen is that the U.S. election deadlock has led to a decline in asset prices in the United States over the last week and the decline in asset prices in the U.S. could lead to tighter liquidity, which will affect emerging markets," said Roger Scher of Fitch.
Some sources, however, maintain that there is not a connection between the events in the U.S. and emerging markets, and others had no opinion on the matter. But even if that is the case, one analyst pointed out, "Uncertainty is never good for the market. Uncertainty as to the level of who's going to be in charge of the United States is a big uncertainty."
The impact on Latin American markets may be most significant. Some market participants said that American investors may hold off on carrying out any new Latin American deals until the election situation in the United States is resolved. "I wouldn't be surprised if deals were delayed until there is some more clarity on the U.S. political situation," said one industry insider.
Several analysts said the focus in this industry is on local market issues, as many of the Latin American markets, specifically Argentina, Brazil and Peru, are currently enduring tough times. The political problems in the United States were said to be "minor" concerns for Latin America by many industry players.
However, there are others who asserted, "If I were a Latin American issuer, I don't think I would launch a deal today. I think I would wait until the events in Argentina define themselves a little better because that's affecting the Latin American markets and there would be no reason to launch now if there's political uncertainty in the United States."
At the moment, the political dilemma in the U.S. is not directly affecting any specific deals, and is at a stage that some have termed as "embarrassing." However, if the situation continues it may become less amusing and the implications on the securitization markets throughout Latin American are unknown.
According to one source, the issue is not which candidate should be elected; rather, it is more imperative to settle the matter quickly. "The uncertainty is something that the outside observers would like to have resolved, because there's a vacuum [of investors] that could potentially be a bit scary," said an analyst.
