Bush victory fails to impress Swiss markets

Victory for the Republican party candidate, George W Bush, in the United States presidential election has received a lukewarm response from Swiss financial markets.

Republicans are traditionally seen as the party of big business, and with a welter of Swiss firms doing business in the US, the election result was always going to have an impact on balance sheets in Switzerland.

But Andreus Huffert, an economist at Warburg Dillon Reed, told swissinfo that Swiss businesses with US interests were never especially concerned about who eventually won the presidential election.

“I think the outcome for most Swiss businesses active in the United States would have been much the same whoever won,” said Huffert. “I think the pharmaceutical industry might be more happy with Bush because the vice-president, Al Gore, would have looked more at the environment policies currently in place.”

Bush’s victory had been expected by the markets so any minor adjustments in Swiss share prices have already taken place.

In fact, even after a year in which the dollar has hit 14-year highs against the Swiss franc the US currency is not expected to be directly affected by Bush’s victory.

“There is still a lot of risk for the dollar because it’s overvalued,” said Huffert. “The US current account deficit is cause for concern and both Bush and Gore’s policies would have accentuated it – so we can expect a weakening in the dollar against the Swiss franc over the long term.”

Many analysts expect the dollar to fall to around SFr1.58 by the end of next year, from its level of SFr1.7 at the moment.

Bush is not expected to make any major economic policy changes, despite his promises of across the board tax cuts. In any case, his room for manoeuvre will be severely limited given the almost equal split between Republicans and Democrats in congress.

Indeed the markets are far more interested in the continued presence of America’s wise man of economic policy, Alan Greenspan, as chairman of the US Federal Reserve. He is largely credited with steering the US economy on its growth path over the past decade.

“As long as Alan Greenspan is there the markets are pretty confident in the way the American economy is directed,” added Huffert.

by Tom O’Brien