The November 3 US presidential election between Donald Trump and Joe Biden could have a colossal effect on the markets. Investors have gradually begun to insure themselves and identify potential winners and losers.
In general, analysts believe that Biden’s plan to raise corporate taxes will put negative pressure on companies’ profits. They expect the Democratic candidate to focus on infrastructure and renewable energy projects.
On the other hand, a second term for Trump would mean more tax cuts and new regulations, which would have a good impact on the energy and financial sectors as US-China talks continue.
Portfolio picks to win for Biden:
Stronger-than-expected pressure on green energy from Biden would cause energy stocks to rise. According to the banks, for example, extending the tax credit would push the following solar shares up: Sunnova Energy International, SunPower Corp, Enphase Energy
Tesla shares have already grown steadily under Trump, but many believe Biden’s presidency will further contribute to their shares. The CFRA analyst’s report shows that Biden has already proposed new tax incentives, government purchases and other measures aimed at benefiting the electric car industry in particular.
Other winners would be automotive suppliers focused on electrification and carbon-free green technologies such as Aptiv, BorgWarner and Visteon.
Biden’s first priority, he said, would be the infrastructure project. Biden’s plan is to stimulate a broad group of engineering and construction companies, such as AECOM, Jacobs Engineering Group and MasTec, which are expected to be the biggest beneficiaries.
Portfolio picks to win for Trump:
Biden’s loss could bring additional relief to companies that have benefited from the corporate tax cut. The report of J.P. Morgan reveals that the likely companies that will benefit significantly from such layoffs are AT&T, Target, Waste Management. The same companies are expected to perform worse in Biden’s term.
With Biden’s planned higher corporate taxes, banks will face many new regulations, especially if progressive as a sen. Elizabeth Warren played an important role. That’s why a victory for Trump is the better scenario for bank stocks. If he wins, Republicans will retain the Senate and all corporate tax regulations will remain unchanged. So far, shares of Wells Fargo and Citigroup are expected to rise.
Trump is likely to continue to maintain high defense spending in his desire for “power” over Russia and China. A jump is expected in all actions related to defense and production of military equipment.
One of President Trump’s ongoing goals is to support energy companies, especially fossil fuels. Most companies in the sector, including those for renewable energy, are expected to benefit from its victory.
Junior Trader Kameliya Ivanova