US: HIA could impact FX spot, basis swaps, foreign banks’ balance sheets and US equity - Nomura

According to the analysts at Nomura, the Trump administration is likely to provide a tax-holiday on the repatriation of foreign earnings by US firms, similar to the HIA of 2005, as part of its business tax reforms.

Key Quotes

“By taking a micro approach to estimating the resulting potential repatriation flow, we estimate that around $1trn of funds could be repatriated, about double our original estimate. Based on the composition of those firms’ holdings of liquidity, we estimate that the potential repatriation flow going through the FX market could reach $240bn, bigger than our original estimates, affecting mainly EUR\USD, but also to a lesser extent USD\CAD, GBP\USD and USD\CHF.”