Funds Europe provides insight into how a selection of fund firms expects assets and sectors to perform in the aftermath of the Donald Trump victory.
Winners
Financials: You have no doubt heard of the Dodd-Frank legislation and its cost impact on financial institutions. Trump wants it repealed or revised. Some investors expect wider deregulation in the financial sector.
Energy and mining: Trump’s not green. He wants the US out of the Paris Agreement on climate change. He is a supporter of US energy independence and, among other measures of benefit to fossil fuel companies, Trump has called for more energy exploration on federal land.
Pharmaceuticals: The sector is not expected to face the same level of price controls under Trump that it may have done under Hillary Clinton.
Infrastructure: Potentially, this is a very big winner if Trump moves to upgrade America’s ailing roads, bridges and airports. The sector would benefit from M&A and industry consolidation.
Russia: Trump’s admiration for President Putin could improve relations with Russia, leading to a reduction in sanctions and Russian businesses finding finance more easily.
Losers
Canadian and Mexican currencies: the US could pull out of the North American Free Trade agreement. Trump sees this agreement as damaging for US jobs.
Emerging market currencies: Trade barriers that are widely expected under Trump will put pressure on these currencies –as well as further slow the growth of global trade.
US exporters: These may be hurt if other countries retaliate against any US trade barriers. Roughly 40% of earnings from S&P 500 Index companies are earned outside the US.
Sources: MFS Investment Management, Columbia Threadneedle, Baring Asset Management. The above are not necessarily consensus views.
©2016 funds europe
