Who will win and who will lose in the US elections?
Tuesday’s presidential election between President Donald Trump and former Vice President Joe Biden could have dramatic consequences for various stocks and sectors. Investors have spent months trying to identify potential winners and losers.
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A group of companies that have benefited from democratic politics Joe Biden, surpassed those who were believed to profit from Republican politics Donald Trump. For the two month period ended Wednesday, «Biden’s basket», created by chief equity strategist at JPMorgan Dubravko Lakos, increased by 4.5% compared to the fall «Trump baskets» by 16%.
ALTERNATIVE ENERGY. Faster transition expected under the Biden administration «green» Energy will support shares in the sector of alternative energy sources. Green energy stocks have already skyrocketed in anticipation of Biden and Democratic policies. From about mid-September to mid-October, the Invesco Solar ETF is up about 40% but has recently retreated.
In this regard, it is interesting to follow the Invesco Solar ETF, iShares Global Clean Energy ETF.
INFRASTRUCTURE: Democratic Shift «likely to mean a large-scale infrastructure bill that should be put at the forefront of restarting the US economy», – according to a recent report by Deutsche Bank International Private Bank.
JP Morgan lists Vulcan Materials, Jacobs Engineering Group and Caterpillar as infrastructure companies in its «Biden’s basket».
Pay attention to iShares US Infrastructure ETF, SPDR S&P Kensho Intelligent Structures ETF, Global X US Infrastructure Development ETF.
FINANCIAL BUMPER: Analysts see a Democratic victory as the surest route to a massive coronavirus relief package to help boost the economy. Such a package can be especially useful for small-cap stocks and, finally, trigger the long-awaited transition to securities..
IShares Core S looks attractive&P Small-Cap ETF, iShares Russell 1000 Value ETF.
TRADE WAR: Biden administration expected to ease tensions in US-China trade tariff war.
«Improved trade will benefit exports, which will benefit many US material companies, including exporters of agricultural products and grains.», – Columbia Threadneedle Investments said in its recent presentation.
In this regard, it is interesting to follow the iShares China Large-Cap ETF..
MARIJUANA: Shares of major U.S.-registered cannabis growers surged after a debate when vice-presidential candidate Kamala Harris said marijuana would be decriminalized at the federal level under the Biden administration. This prospect has led to a rise in stocks in the sector.
Accordingly, one should pay attention to ETFMG Alternative Harvest ETF.
BANKS: Along with higher corporate taxes, banks may face concerns about more regulations being passed under the Biden administration. Banks during Trump’s second term «may see additional tailwinds from ongoing ”light touch” towards regulation and efforts to reduce taxes», – says Ameriprise Financial report.
JP Morgan includes Bank of America, Wells Fargo and Citigroup shares in its «Trump’s basket».
If Biden wins, analysts see a favorable situation for banks as they can benefit from a sizable stimulus package and potentially higher bond yields..
SPDR S&P Bank ETF, Invesco KBW Bank ETF.
FOSSIL FUEL: Trump’s Victory «could lead to a more favorable tax and regulatory environment for conventional energy», – said in a recent report by Allianz Global Investors.
While Biden has made clean energy a key element of his agenda, Columbia Threadneedle Investments said that «banning new leases or permits for federal lands for energy exploration will be a major concern for traditional American oil and gas companies».
In this regard, you should pay attention to SPDR S&P Oil & Gas exploration & Production ETF.
BIG TECH: Both sides are expected to continue regulatory pressure on tech companies, but Deutsche Bank International Private Bank says the sector has been «one of the largest sponsors» Trump’s tax reform and «also likely to benefit from a softer stance on regulation and antitrust policy».
According to Allianz, Democrats «are more likely to push for changes in Big Tech, including divestitures and additional rules».
Pay attention to Invesco QQQ ETF, Technology Select Sector SPDR Fund.
DEFENSE SECTOR: Trump Administration in Second Term «likely to continue to benefit the aerospace and defense industry», – said Ameriprise in a recent report, noting Trump is likely to continue pushing for more defense spending.
IShares US Aerospace looks interesting & Defense, SPDR S&P Aerospace & Defense ETF.
PHARMA AND BIOTECHNOLOGIES: While both political parties have opposed high prescription drug prices, Biden’s victory, which in particular is coupled with a Democratic Senate victory, could unnerve the heavily regulated health sector, so there might be some relief here if if Trump is re-elected.
Investors will focus on Health Care Select Sector SPDR Fund, iShares US Pharmaceuticals ETF.