As market analysts increasingly predict a Donald Trump victory in the upcoming U.S. presidential election, investors are closely monitoring three sectors that are expected to thrive under the policies of his potential administration.
Nigel Green, CEO and founder of deVere Group - one of the world's leading independent financial advisory and asset management organizations - has shed light on these sectors. His analysis comes after Saturday's incident at Trump's campaign rally, which appears to have boosted his re-election chances.
Should Trump reclaim the White House, expectations are high for hawkish trade policies, looser regulations, a softer stance on climate change, and continued tax cuts for both corporations and individuals.
Of course, if he wins, there will be clear winners and losers for investors," Green says. Here are the three sectors likely to benefit:
1. Energy.
The Trump administration has historically prioritized energy independence and economic growth over strict environmental regulations. Past actions, such as rolling back Obama-era climate policies and withdrawing from the Paris Agreement, signal that this trend will continue, particularly benefiting the fossil fuel sector.
"If Trump wins, a similar approach can be expected to benefit the energy sector, particularly fossil fuels," Green said. Eased regulations could reduce operating costs for coal, oil and natural gas companies. In addition, domestic energy production is likely to increase, boosting the profitability of companies involved in extraction, production, and distribution. Trump's focus on rebuilding infrastructure could also increase energy demand.
2. Financial
The Trump administration, which has historically favored deregulation, has sought to reduce the regulatory burden on financial institutions. Fewer regulations could lead to lower compliance costs and higher profit margins, as well as facilitate increased lending activity, which would boost revenues for financial services companies.
Market confidence in the financial sector is already rising as investors anticipate a more business-friendly environment following a Republican victory.
3. Manufacturing.
Trump's "America First" policy has emphasized domestic manufacturing, with the goal of reducing reliance on imports. A revival of this policy could include tariffs on foreign goods and incentives for American companies to bring manufacturing back home.
Protection from foreign competition through hawkish trade policies could strengthen the market share and profitability of domestic manufacturers. Incentives to repatriate manufacturing jobs could also boost U.S. employment and output, with a positive impact on the manufacturing sector.
An extension of corporate tax cuts would further benefit manufacturers by reducing tax liabilities, freeing up capital for investment and expansion.
Investors are positioning themselves to capitalize on these expected changes as markets begin to price in a Trump victory.
