13 October 2016
Clinton v Trump: Which industries win?
By Ryan Lightfoot-Brown, research analyst
Two debates down and about a million barbs in, the Clinton versus Trump spectacular has become prime time viewing. Politically, culturally, socially and economically, the United States' upcoming election will impact countries around the world.
From an investors' perspective, some industries are likely to be bigger winners than others, depending on who steps up to the plate as America's 45th president.
Along with our friends at Fidelity, we've taken a quick look at how a few key industries might fare under Clinton or Trump.
- Agriculture. Clinton has shown a much more liberal attitude towards immigration, which could be a benefit to sectors with high levels of migrant workers, including agriculture.
- Clean energy. Clinton is a keen advocate of environmental protection, which bodes well for industries like solar and wind power. Trump opposes environmental regulation and has a somewhat ambivalent attitude to climate change, which means US fossil fuel producers, including shale producers, the coal industry and refiners may get a good run.
- Pharmaceuticals and health care. While drugs will always be needed, both candidates have mentioned drug pricing is an area of concern and Clinton's track record in the health care sector is particularly well-known. If regulations on drug price increases were introduced, pharmaceuticals' profits could obviously come under pressure. On the flip side, Clinton has committed to continuity for Obamacare, which means health care providers and insurers that have seen pick-ups since the act was passed could continue to do well.
- Defence. Trump says he wants to double the share of military spending in gross domestic product. Defence contractors and military hardware manufacturers could benefit in this scenario.
- Construction and infrastructure. These industries are expected to be winners regardless of the election victor, as both sides are selling a message around building for America's future. Trump might go about this slightly more aggressively, based on some of his comments, although Clinton has more clearly outlined policy objectives.
- Restaurants and hospitality. Clinton calls for a much higher minimum wage. This could disadvantage sectors and companies that employ large amounts of low cost labour, such restaurants and hospitality, as well as perhaps retail and manufacturing.
- Free trade. Trump is generally opposed to freer trade and Clinton has been edged towards this position too throughout the campaign. Trump wants more tariffs, which could hurt import-driven sectors – not to mention international markets themselves; for example, many emerging markets are concerned about how a Trump presidency might impact their trade with America.
- Corporate tax reductions. This is one of Trump's big calling cards and could be potentially beneficial to all sectors if implemented. The reality is, though, that the money to fund America has to come from somewhere and if government debt increased significantly this could be bad news for US treasury bonds.
Where to next?
- How should you invest in the US this year?
- US politics has gone from the ridiculous to the absurd
- US interest rates and the election: should investors worry?
¹Source: Fidelity Global Dividend September 2016 monthly fact sheet
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Ryan's views are his own and do not constitute financial advice.
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