Advisor Flipbooks

2024 SEI ® Data as of 12/31/2023 unless otherwise indicated. 13 It is no secret that foreign businesses are redirecting resources away from China. Exhibit 17 shows that foreign direct investment in China turned negative in the third quarter of 2023—the first time that has happened since the country opened itself up to the world in 1978. Whether Xi's extension of an olive branch to the U.S. government and business succeeds is an open question. Recent abductions and arrests of corporate executives (mostly local Chinese, but also some foreign executives) have hurt the country's reputation badly. In the interim, both China and the U.S. continue to implement measures aimed at reducing their economic dependence on each other through trade restrictions and other non-tariff barriers. Exhibit 17: The love-affair with China is over Source: Oxford Economics, SEI. The next strain in the U.S.-China relationship could come as soon as mid-January, with the presidential election in Taiwan. It is a three-way race, with the leader of the incumbent Democratic Progressive Party holding the lead in the most recent polling. If he were to prevail, tensions with China will likely remain at an uncomfortably high pitch. There is a heavy global election schedule in 2024. In addition to Taiwan in January, there are presidential and/or parliamentary and congressional elections in several major countries, including Indonesia (February), Russia (March), India (April), South Africa (May), the European Union (June), the U.K. (to be determined) and the U.S. (November). Some of these could be closely run affairs that may lead to important policy shifts. Of special interest, of course, are the elections in the U.K. and the U.S. In the U.K., the Labour Party appears to hold a solid lead, winning recent by-elections in former Tory strongholds. In the U.S. the polls are currently suggesting a victory by former President Donald Trump over President Biden. But it is still early in the election cycle, and there will be plenty of ups and down for both candidates (assuming each is nominated by their respective party, which seems likely). We expect a fair degree of market volatility as the vote nears in both the U.K. and U.S. The NDR (Ned Davis Research) presidential cycle database, as represented in Exhibit 18, tracks the performance of U.S. large-cap equities back to 1948. Exhibit 18: Equities manage through presidential elections Source: Ned Davis Research, SEI. -20 0 20 40 60 80 100 120 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Billions of U.S. dollars Foreign direct investment into China 7.3 10.7 9.7 4.3 8.2 -0.3 9.1 11.5 8.9 -2 0 2 4 6 8 10 12 14 Average gain per year (19 cases) Median gain per year (19) Incumbent party wins (9) Incumbent party loses (10) Incumbent Republican wins (5) Incumbent Republican loses (5) Incumbent Republican loses, excluding 2008 (4) Incumbent Democrat wins (4) Incumbent Democrat loses (5) Percent S&P 500 Index (price-only) percent change in U.S. presidential election years since 1948

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