The rally in emerging market shares took a breather in September, whilst developed market shares moved up 2% as measured by the MSCI World Index. These gains were made among the noise of Trump’s announcement on tax reform, as well as Janet Yellen’s announcement that the Fed has started to unwind its $4.5 trillion portfolio of government bonds.
Trump’s latest US tax proposal targets a top individual rate of tax of 35% and a corporate tax rate of 20%. As South Africans, with top tax rates of 45% and 28% respectively, and increases in wealth taxes likely, this sounds like tax-rate-nirvana. If successful, lower US tax rates are expected to boost already elevated US markets, however not all analysts believe lower tax will necessarily translate into sustainable company growth, which is what drives markets over the long term.