The winner of the U.S. presidential election is up in the air. The sure thing – a Hillary Clinton victory – is no longer a sure thing. And the uncertainty is upsetting markets.
In the meantime, investors in U.S. markets can look at the broad policy prescriptions of both candidates to anticipate what sectors might benefit – or be cut off at the knees.
If Hillary Clinton wins
A President Hillary Clinton would probably be good for:
– Renewable energy: Clinton supports the Paris climate deal and the Clean Power Plan to reduce U.S. states’ greenhouse gas emissions. Renewables are a global industry, and more U.S. involvement would only help. The VanEck Vectors Global Alternative Energy ETF (NYSE; ticker GEX) invests in global renewable energy market leaders.
– Health care: Clinton has said she would extend the reach of the Affordable Care Act, which is intended to make health care insurance more affordable for more Americans, and to expand insurance coverage. The Health Care Select Sector SPDR Fund (NYSE; ticker: XLV) is the biggest, oldest and most traded health care sector ETF in the U.S., and holds health care stocks found on the S&P 500.
– Mexico: The Mexican economy is struggling. The prospect of a President Trump making good on pledges to renegotiate the terms of the North American Free Trade Agreement (NAFTA) has made the peso the worst-performing major currency. But this should change if Clinton wins next week’s election. The iShares MSCI Mexico Capped ETF (NYSE; ticker: EWW) is a good proxy for the Mexican equity market.
But a Clinton victory would be bad for financials, like banks and brokerages. Clinton has said that she intends to impose a “risk fee” on the U.S.’s largest financial institutions. She also intends to appoint officials to carry out “unwavering oversight” of Wall Street.
If Donald Trump wins
President Donald Trump would likely be good for:
– Financials: A more benign regulatory environment would benefit banks – simply because Hillary Clinton’s proposed reforms wouldn’t happen. The Vanguard Financials ETF (NYSE; ticker: VFH) holds all the big names in U.S. banking.
– Natural gas: Trump’s comments on the campaign trail suggest he would cut back on oil and gas regulation. This could result in more natural gas exports from the U.S. to a gas-hungry world. The First Trust ISE-Revere Natural Gas Index ETF (NYSE; ticker: FCG) focuses on companies that get most of their revenue from natural gas exploration and production.
But if Trump becomes president, it would be bad for:
– Health care stocks: Trump has vowed to end the Affordable Care Act. That would throw the entire U.S. health care industry into turmoil. The Health Care Select Sector SPDR Fund (NYSE; ticker: XLV) would suffer.
– Asia: As we’ve explained, if Trump follows through on his protectionist threats, it will be bad news for Asia’s economies. For more details on how Trump will affect Asia, and how to position your portfolio, see our free report here.
Regardless of who is America’s president
Whether Trump wins or Clinton wins, these are the sectors that will likely benefit include:
– Infrastructure: Both candidates have pledged to increase spending on infrastructure – things like roads, bridges and waterworks. Companies involved in building, repairing or maintaining infrastructure will benefit as various plans are implemented to solve America’s “infrastructure gap.” (This doesn’t even include Trump’s plan to build a huge wall on the U.S.-Mexico border.) The PowerShares Dynamic Building & Construction Portfolio ETF (NYSE; ticker: PKB) is an ETF that covers the engineering and construction industry in the U.S.
– Defense contractors: Both Trump and Clinton have promised to build a stronger U.S. military. This usually means more money for the army, navy and air force. And this will benefit the companies that make the weapons, planes and ships. The iShares U.S. Aerospace & Defense ETF (NYSE; ticker: ITA) has holdings in the U.S. aerospace and defense industry.
– Gold: Having gold as insurance and as an investment is a great idea now. See our special report on gold, which you can download here.