The next US president may be called Donald Trump. For some that would be a nightmare, others are looking forward to his victory – even on the stock exchanges. The investment bank Goldman Sachs has put together a portfolio of stocks that could benefit from a Trump triumph.
Donald Trump approaches the White House. On the way to becoming the Republican candidate, he eliminated the last internal party competitor. The only thing standing between him and the next US presidency is incumbent Joe Biden – and perhaps judgments in court cases with an uncertain outcome. But it is possible that Trump will triumph and then push through a tough, protectionist “America First” agenda with implications for the global economy and global stock markets. The strategists at Wall Street bank Goldman Sachs have compiled which regions, industries and companies would benefit from a Trump victory and which could suffer.
The bank used Trump’s first term in office as a benchmark, when his administration imposed tariffs on imports from the European Union, Canada and Mexico and initiated a trade dispute with China. Goldman Sachs expects that large parts of the European and Chinese economies and thus the stock markets will suffer from a Trump election victory. At the forefront: the Frankfurt DAX leading index, the MDAX of German medium-sized stocks as well as economically sensitive cyclical sectors – such as the steel industry, chemicals and automobile production. On the other hand, certain industries in the USA could benefit from a second Trump term, according to Goldman Sachs.
The investment site “Seeking Alpha” looked at Goldman Sachs’ Trump portfolio. These companies and these sectors can therefore benefit from another term of office:
Financial industry. Trump wants to loosen capital regulations for banks and weaken antitrust law. Deregulation in the financial sector is also on his agenda. This should make mergers and acquisitions easier – a lucrative business for financial institutions. Goldman Sachs has therefore put Wall Street giant JP Morgan and the consulting firm Evercore on the list, among others.
Steel industry. Trump wants to shield this industry more from foreign competition. Possible beneficiaries: Steel Dynamics, Ryerson Holding and Reliance Steel & Aluminum.
Internal security and law enforcement. Trump has announced that he will provide “record high” funding to hire police officers and better equip the police. The Trump portfolio therefore includes Axon (a manufacturer of Taser devices and weapons for security forces), the prison operators Geo Group and CoreCivic, as well as cybersecurity companies such as Sentinel One and CrowdStrike.
Relocation of manufacturing in the USA. Trump has announced that he will promote production in the USA. According to Goldman Sachs, US companies that rely on domestic supply chains and have a high proportion of manufacturing in the USA can benefit from such a policy. The investment bank names Mohawk (a manufacturer of floor coverings) KLA (semiconductor supplier) as well as large chip companies such as Texas Instruments, Applied Materials, Intel and Broadcom. Companies that specialize in electrification and automation are also likely to benefit from the relocation of production to the USA – for example Rockwell Automation (provider of digital transformation and industrial automation) and Regal Rexnord (provider of electric motors and drive components).
Border security. Trump strengthened the border with Mexico during his presidency and said he would tighten it in another term. Companies involved in the construction of facilities during his term in the White House include the construction companies Fluor and Aecom, the construction equipment company Caterpillar, the cement manufacturer Cemex and Vulcan, a producer of gravel.
Trump wants “small business” support financially. Goldman Sachs is therefore one of the potential beneficiaries of a Trump presidency: companies that generate the lion’s share of their sales with smaller companies – such as the restaurant recommendation portal Yelp, the freelance platform Upwork, Bill Holdings, a manufacturer of financial software, and Squarespace Offers tools for creating websites for online shops.
Fossil energy. In contrast to Biden, Trump does not rely on renewable energies, but on fossil fuels. According to Goldman Sachs, the beneficiaries could include the oil companies Exxon Mobil, Devon and Halliburton, the drilling service provider Helmerich & Payne and the pipeline operator Oneok.
It is likely, but not entirely certain, that Trump will run as the Republican candidate against Joe Biden in November. For example, a serious illness or a verdict in one of the trials underway against him could prevent this or at least influence the chances in a duel with Biden. In addition, the outcome of the elections is completely open, in which not only the President, but also part of the Senate and the entire House of Representatives will be elected.
How markets and individual stocks develop also depends on many factors. But that doesn’t change the fact that the policies of the president of the world’s largest economy can have noticeable effects on industries and therefore individual companies.