What sectors and stocks will benefit from Trump or Harris victory?
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WHAT SECTORS AND STOCKS WILL BENEFIT FROM TRUMP OR HARRIS VICTORY?
With the U.S. general election just 35 days away, Evercore analysts have identified possible sectors and stocks that could benefit if either Republicans led by their nominee former President Donald Trump or Vice President Kamala Harris of the Democratic party prevail in the closely-contested presidential and congressional races.
The ascension of Harris to the top of the Democratic party following the departure of President Joe Biden after a woeful debate performance has now tightened the polling since July, when Evercore conducted its last analysis.
Both Trump and Harris now have a 50% chance of victory, while Republicans have a 25% chance of sweeping Congress and Democrats have a 10% chance. The probability of a divided Congress under Trump is 25%, while that chance under Harris is 40%, according to Evercore analysts led by Julian Emmanuel.
However, there has been little material changes to the political agenda of either Republicans and Trump or Democrats and Harris since she became her party's presidential nominee.
Trump will likely return with aggressive use of presidential tariff authority, bringing back trade wars and possible market volatility. He will likely implement disruptive immigration orders, work to cut corporate taxes, emphasize deregulation, and undermine U.S. security alliances that could increase geopolitical risks and tensions with China.
Harris, on the other hand, will likely stick with the current Biden agenda on regulation including being "pro-climate" and a "small yard, high fence" approach to China and technology companies. Tense negotiations over government funding, the debt limit and year-end tax cliff with consume Washington next year under Harris.
As a result of all these, the sectors that would benefit most from Trump's regulatory push will likely be financials - including banks such as Wells Fargo WFC.N and First Horizon Corp FHN.N as well as insurance brokerages such as Arthur J. Gallagher & Co AJG.N. Oil and gas majors are also expected to benefit under Trump, including Exxon Mobil XOM.N, EQT EQT.N and Halliburton HAL.N.
With Republicans likely to push for increased defense spending if they sweep congress, stocks of U.S. aerospace and defense contractors will be in favor. The sectors most exposed to renewed trade wars under Trump are automakers and agricultural corporations.
A potential Harris administration, meanwhile, will continue implementing clean energy policies, helping to boost renewable energy and electric vehicle companies such as Fluence Energy FLNC.O, AES Corporation AES.BLUE and Lear Corp LEA.N. Unum Group UNM.N and other Affordable Care Act/Medicaid health insurance providers will likely also benefit under Harris, according to Evercore.
The vulnerable sectors after a Harris victory given a continued aggressive regulatory stance are financials, utilities powered by gas and coal, companies managing prescription drugs, and Medicare Advantage-leveraged insurers, the Evercore analysts noted.
(Chibuike Oguh)
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