Morgan Stanley Fixed-EM Fixed Income Strategy Global Economics US Election Imp...-110151547

M Global FoundationEM Fixed Income Strategy & Global Economics US Election Implications for EMMorgan Stanley & Co. LLCSimon WaeverStrategist Simon.Waever@morganstanley.com +1 212 296-8101 Morgan Stanley & Co. International plc+James K LordStrategist James.Lord@morganstanley.com +44 20 7677-3254 Morgan Stanley & Co International plc (DIFC Branch)+Rajeev SibalSenior Global Economist Rajeev.Sibal@morganstanley.com +971 4 709-7201 Morgan Stanley & Co. LLCEmma C CerdaStrategist Emma.Cerda@morganstanley.com +1 212 761-2344 Carolyn L CampbellStrategist Carolyn.Campbell@morganstanley.com +1 212 761-3748 Ariana SalvatoreStrategist Ariana.Salvatore@morganstanley.com Andrew M WatrousStrategist Andrew.Watrous@morganstanley.com +1 212 761-5287 Ioana ZamfirStrategist Ioana.Zamfir@morganstanley.com +1 212 761-4012 Morgan Stanley India Company Private Limited+Mayank PhadkeEconomist Mayank.Phadke@morganstanley.com +91 22 6514-3452 Morgan Stanley & Co. International plc+Pascal N BodeStrategist Pascal.Bode@morganstanley.com +44 20 7425-3282 Neville Z MandimikaStrategist Neville.Mandimika@morganstanley.com +44 20 7425-2509 Morgan Stanley Asia Limited+Min DaiStrategist Min.Dai@morganstanley.com +852 2239-7983 Gek Teng KhooStrategist Gek.Teng.Khoo@morganstanley.com +852 3963-0303 With uncertainty still high into the US elections, we identify the key macro and country-level implications of policies that may materialise under a Republican presidency, which is where changes are likely to be most significant. Beyond a stronger dollar in general, the country details matter. Focus on the US policies that can potentially change and the impact on EM: Work produced by the Morgan Stanley public policy team so far suggests scope for larger policy changes relative to the status quo under a Republican presidency compared to a Democratic one, with scenarios involving a united government across the White House and Congress also seeing potential for more meaningful impacts.Most US policy macro factors lead to a stronger USD and hence weaker EM FX: We see tariffs as the most important factor in driving a stronger USD, yet with fiscal policies also pointing in the same direction. Any changes in US immigration policy are likely to be more consequential for specific EM countries, especially in Latin America, than broadly for USD or the EM fixed income asset class in general.At the micro level, there are five key policies under a Trump presidency that could determine country outcomes: We focus on the country-level impacts of: 1) Trade; 2) Immigration; 3) Climate and energy; 4) Overseas aid; and 5) Foreign policy. Overall there appear to be few clear beneficiaries across all five policy areas, with the focus instead on those at risk. Key EM local market views: We believe that CNH is the best expression of trade tensions, yet timing matters, with KRW, THB, MYR and TWD also vulnerable. While there are scenarios in which Mexico benefits, we see risks