KUALA LUMPUR: With Americans set to go to the polls tomorrow to elect their new president, financial markets around the world — Bursa Malaysia included — appear to be shaken by reports of a tightening race.

The likelihood of Republican nominee Donald Trump emerging as the winner has increased after Democratic Party candidate Hillary Clinton lost the comfortable lead she held late last month. This prospect has rattled the markets as investors largely view Clinton as the leader who would maintain the status quo, while a Trump presidency means uncertainty to the market.

While average opinion polls compiled by the US-based RealClearPolitics website showed Clinton leading by 7.1 percentage points in mid-October, the gap narrowed down to just 1.5 percentage points last week, partly due to the FBI’s eleventh-hour resuscitation of her email controversy.

“If there is one thing we should learn from Brexit is that anything is possible. The uncertainty over the outcome of the US election and what happens after that is as uncertain as the next Trump’s tweet,” a market analyst said.

Jameel Ahmad, vice-president of market research at ForexTime Ltd, said investors have once again failed to price in any risk premium as was the case during the Brexit vote.

Recall that the FBM KLCI fell to as low as 1,611.88 points after Britain voted in favour of leaving the EU, before recovering to 1,634.05.

“The markets are becoming jumpier in the past couple of days as a result of investors realising that Trump does indeed stand a reasonable chance of winning the election,” Jameel told The Edge Financial Daily last Friday.

He said that in the run-up to the US election, the Malaysian market, being a part of emerging markets, could see a prolonged round of risk aversion, whereby investors steer away from emerging market assets.

According to Jameel’s market analysis of the presidential election, a Trump victory will be remembered in history as the most shocking political moment of the modern era and will turn the global market outlook upside down.

Fundsupermart.com senior research analyst Lee Tien Xiang said there is a high possibility for the market to remain neutral to downtrend moving into the election day as investors turn into a “risk-off” mode.

Lee sees three possible outcomes of the election and their impact on the market.

“One would be for Hillary Clinton to be elected as president while the House of Representatives and Senate remain under Republican control. Such a scenario would result in a gridlocked situation and maintained status quo. The market will likely see a recovery under such a scenario from the decline we have seen before the election,” he said.

The second possibility, he added, would be for Clinton to be elected and the Senate being taken over by the Democrats while the Republicans continue to control the House of Representatives. Under such scenario, he said Clinton will be able to carry out some of her economic stimulus plan, with positive reaction from the markets.

Lee said the third possibility would be for Trump to be elected, sending a short-term shock to the market. But the analyst said the market will recover as it would be unlikely that the House of Representatives would agree to some of extreme measures proposed by Trump.

“Even if Trump does eventually win, we think that the shock will be temporary. The fundamentals and growth in emerging market should help sustain the market,” he said.

A head of equity at a local asset management firm shared that the odds of Trump being the president remain small, and even if he wins, it is unlikely that he would implement most of the things that he has been saying in his campaigns.

“Some of the things that Trump was saying such as temporary closing of US borders to all Muslims and building a wall along the Mexican border and making them pay for it … Things like these are more likely to be rhetoric.

“Trump’s advisers are mostly businessmen and hedge fund managers so it’s likely that if he does win, the proposals will be more rational,” said the head of equity.

Etiqa Insurance and Takaful Bhd head of research, Chris Eng, agreed that investors are largely in a “risk-off” mode currently.

“If Trump wins, we should see a sharp selldown initially. The market however is likely to see a relief rally after that,” Eng said.

Amundi Asset Management Research said in a report on the US presidential election that “wait-and-seeism” has a high chance of dominating in the first months following the election.

“By all appearances, the president may be dealing with a hostile Congress,” it said.