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A President Donald Trump supporter and a former Vice President Joe Biden supporter converse before the Joe Biden campaign rally at the National World War I Museum and Memorial on March 7, 2020, in Kansas City, Missouri.
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The 2016 U.S. Presidential election result rippled far and wide for global financial markets. The coming November race could be equally gripping, as incumbent President Donald Trump and Democratic challenger Joe Biden go head-to-head.
While Biden is ahead in some polls, months of campaigning remain. But it isn’t just Wall Street investors with something at stake, as strategists at
UBS
say the outcome could hold “major implications” for European assets.
“Given the stark contrast between the policy platforms of the two parties, a decisive swing toward either party would impact a range of sectors, from energy and finance to technology and health care,” says the UBS team, led by Mark Haefele, chief investment officer, global wealth management.
Should Democrats sweep the presidency and Congress, Haefele and the team suggest exposure to Biden’s “green” agenda, of which he has pledged to spend a chunk of his $700 billion recovery plan. Key stocks here are European automobile makers, which stand to gain from lower tariffs and electric-vehicle supportive policies.
And while health-care stocks could take a hit in the lead up to that election, a relief rally is likely afterward, even in a Democratic sweep. ”Overall, long-term themes that should benefit include smart mobility and energy efficiency,” says the UBS team.
Should Republicans take the White House and Congress, energy would be a big winner, rallying in relief over the removal of the threat of stricter regulations that Democrats had been proposing.
And a second-term Trump administration would likely maintain a tough line on trade, encouraging production back to the U.S. Stocks that could benefit include robotics and automation, European companies included, while tariff threats would weigh over exporters.
As for those investors who don’t want to try to pick a side right now, UBS advises focusing on longer-term themes that won’t likely be affected by either outcome.
“We think enabling technologies, which stand to grow swiftly regardless of the outcome of the November vote, have strong potential. These technologies include artificial intelligence, augmented reality, virtual reality, big data, cloud computing, and 5G, which together are expected to grow by double-digit percentages on average during the next few years,” the strategists say.