US sectors to profit from Trump win

US sectors to profit from Trump win

Donald Trump’s victory over Hillary Clinton has sent shock waves across the financial markets, but investment professionals have pinpointed US sectors that could benefit from a Republican president.

A number of fund mangers have said the obvious beneficiaries will be those sectors exposed to infrastructure spending, such as industrial and technology companies. 

For example, David Bertocchi, head of global equities at Barings, is confident the US will continue to see good growth opportunities, particularly where tech firms are concerned.

He said he is seeing rapid advances in electric vehicles, autonomous automobiles, digital content delivery, e-commerce and medical technology, which he doesn’t expect to wane in light of the shock election result.

President Trump has vowed to do away with Obamacare as he looks to replace it with a “less expensive” healthcare system, which Henderson's head of global equities, Matthew Beesley, said is clearly bad news for large sections of the healthcare sector.

However, he said pharmaceutical stocks could rally because the lower drug prices proposed by Mrs Clinton have now been taken off the table. 

Ziad Bakri, portfolio manager at T Rowe Price, echoed this point, saying overall the election is perceived as good for drug stocks.

He also argued Mr Trump’s plan to repeal the Affordable Care Act could end up being positive for healthcare stocks in general. 

A number of fund managers have said they expect certain US carbon energy stocks to rally in light of Mr Trump’s victory, particularly when he is against some environmental regulations and has talked about a revitalisation of the US coal mining industry.

Tom Nelson, head of the commodities and resources team at Investec, said the US mining and the oil and gas sector should be more resilient than others, particularly bearing in mind Mr Trump’s protectionist stance towards the US industry. 

Charlie Thomas, manager of the Jupiter Ecology fund, said one of the few areas that the Democrats and Republicans found common ground is the “pressing need” for US infrastructure investment. 

“This bodes relatively well companies providing environmental solutions particularly in the water, smart energy and rail transport infrastructure.”

Richard Dunbar, senior investment strategist at Aberdeen Asset Management, said selling off assets in light of the vote is “irrational”, adding: “Now is the time for cool heads.” 

“The US remains the country from which virtually all disruptive technology over the last 50 years has emerged; where the rule of law is sacrosanct; with relatively favourable demographics; and broad and deep pools of capital. 

“None of these things have changed as a result of events overnight."

Angel Agudo, portfolio manager of the Fidelity American Special Situations fund, said: “In general, there is still abundance of investment opportunities in the US.”

But he said investors need to be conscious that we are in the advanced stages of the business cycle where margins are high, adding: “It is important to be selective in the current market environment.”