Trading on Trump's tweets not a smart move, says DBS chief investment officer

Trading on Trump's tweets not a smart move, says DBS chief investment officer
President Donald Trump
PHOTO: AFP

President-elect Donald Trump has frequently demonstrated the ability to move markets with 140 characters or less by tweeting about specific companies, many of whom have seen their shares tumble.

But looking at Trump's Twitter feed daily for short-term trading strategies is not a smart move, according to the chief investment officer at Singapore's DBS Group Wealth Management.

Lim Say Boon spoke to CNBC's "Squawk Box" on Thursday and said traders should not discard the importance of charts, technical analysis and economic trends to play in the market.

Since Trump's election victory in November, US assets have risen sharply due to renewed investor confidence on the economic outlook stateside. But Lim pointed out that key indicators including Treasury yields and interest rates have been near historical lows in recent years and their normalisation would have happened even without Trump. Even the dollar has rebounded from previous lows.

An expansionary policy approach from the Trump administration will only accelerate the inevitable rebound.

"When you look at the charts...the dollar was starting to turn bullish long before the arrival of Donald Trump," said Lim.

To be sure, when Trump became the official Republican Party presidential nominee on July 19 last year, the dollar was down 1.3 per cent from a year earlier against a basket of currencies. But the dollar index was rebounding from a 2016 intraday low of 91.910 reached in May. On the day of the election, the dollar traded at 97.861 and climbed 4.4 per cent to 102.210 by the end of the year.

Trump has provided little details about his proposed policies on Twitter, which, according to one investor, makes it harder for market watchers to fine-tune their trading strategies based on the tweets.

"We don't know the policy stances (but) we know suggestions of the policy stances," Colin Moore, global chief investment officer at Columbia Threadneedle Investments, told CNBC's "Squawk Box" on Thursday.

On the campaign trail, and on Twitter, Trump has provided a general picture of what his policies might look like. Moore believes infrastructure will be a key focus area, as will tax reforms. But their extent remain debatable. "Until that becomes more concrete, you're better to stay out of that," he said.

Things Singapore investors should know after US election

Art of the tweet

The President-elect's often confrontational attitude on Twitter could be an attempt to make an extreme stance and then work back toward the middle, a tactic laid out by his book 'The Art of the Deal,' said Moore.

For example, Trump previously said on Twitter he would impose tariffs on US companies that manufactured goods outside the country and then imported them to sell to the American consumer. Moore reckons Trump's Twitter threats have more influence domestically because of the authority the President has. Internationally, the tactic may not work, particularly against China, and could even provoke a retaliatory response.

Trump has been critical of China and accused the world's second largest economy of manipulating its currency, threatened to levy as much as 45 per cent tariffs on Chinese imports and held a telephone conversation with the Taiwanese President Tsai Ing-wen, a move Beijing saw as a threat to its "One-China" policy. He also appointed notable China critics Peter Navarro and Robert Lighthizer to his cabinet.

On Wednesday, at his Senate confirmation hearing, Trump's nominee for secretary of state, Rex Tillerson said China should be denied access to islands it has built on the contested South China Sea.

However, at his first press conference of the year on Wednesday, Trump did not provide any new insight into what the actual US policy stance toward China will look like under his administration.

Most market commentators do not expect the US to impose a flat 45 per cent tariff across all Chinese imports - not only would it provoke a reaction from China, it would also make a lot of domestically-consumed goods more expensive for the US consumers and reduce their spending power.

DBS' Lim said Trump would likely be selective about the tariffs - and that he could not back away entirely from the very "hawkish" stance he took on China with trade.

But that could also mean China might decide to call out Trump's bluff regarding the hard-line approach, according to Lim.

"I'll call your bluff and let's see what your next card is, and what do you do for an encore? Tweet again?"

More about

DONALD TRUMP
Purchase this article for republication.

BRANDINSIDER

SPONSORED

Most Read

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.