USNov 9 2016

US sectors to profit from Trump win

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US sectors to profit from Trump win

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.”

Now is the time for cool heads.Richard Dunbar

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.”

Dylan Ball, portfolio manager at Templeton Global Equity Group, said: “Growth and quality stocks will suffer less as investors hide out in technology and consumer staple sectors.”

He also said the US equity market might lose out less than other regions in global equities.

Despite this, there is a general consensus that the US equity and fixed income markets could be hit hard by a “wild card” president, with some fund managers predicting a material downturn in markets.

But Tom Carroll, investment director at Sanlam Four, said he had expected the initial sell-off in US equities to be more violent.

“The S&P 500 was down around 2 per cent, which is not that substantial when you look at the volatility over the past two years.

“Trump is on the whole pro-growth, whether that is in deregulation, infrastructure spending, or cutting taxes; which in the medium-term I would anticipate would be good for equities.”

Mr Carroll said we could see a breakdown in correlation between equities and bonds, as shares move up and bond yields shift down.

On the whole, he said Mr Trump could be positive for US shares, adding his team has been looking to increase equity weightings.

katherine.denham@ft.com