Election 2016 - Are fears all Trumped up?

Erica Szczech - Nov 02, 2016
With the election just 6 days away, we thought we would share our views on the impact of either candidate taking the Presidency, by sector allocation. Views expressed by Canaccord Genuity’s research teams.

With the election just 6 days away, we thought we would share our views on the impact of either candidate taking the Presidency, by sector allocation. Views expressed by Canaccord Genuity’s research teams.

Polls are tightening: The Real Clear Politics poll currently shows that Clinton’s lead over Trump has narrowed to 2.2% in both a head-to-head and 4-way contest. In addition, fivethirtyeight.com has reduced the probability of a Clinton victory to 74% from 85%+ earlier in the fall, with the Democrats’ probability of winning the Senate at ~72%.

In this report, our analysts in the U.S., Canada and the U.K. assess the impact of a Clinton and Trump victory on their respective sectors. We have also included commentary from our Quest® team (proprietary research done by Canaccord Genuity).


Aerospace & Defense: US analyst Ken Herbert believes the sector could benefit under either scenario but a Trump victory could be more impactful. Our UK analyst, Anthony Plom, sees a Trump victory as more positive.


Energy: Our energy team believes Trump would be marginally more positive, but fears of Clinton introducing new regulations that may negatively impact energy stocks appear to be overblown. For pipelines, Canadian analyst David Galison sees a mixed impact under a Republican victory, as Trump has said that he will support Keystone but his support is conditional on the U.S. sharing in the profits.


Energy & Power Technologies: US analyst John Quealy notes that “the campaign has been disappointingly dull on climate change and sustainability-related issues and initiatives.” However, under Clinton he expects a bit of an “Obama 3.0” strategy on climate/sustainability. The impact of a Trump victory would appear less positive given his skepticism on climate change.


Engineering and Construction: Canadian analyst Yuri Lynk believes a number of companies stand to benefit regardless of who wins, as both candidates support higher infrastructure spending.


Manufacturing Technology: US analyst Bobby Burleson sees each candidate as supportive of infrastructure investment and expects a negligible impact from the election results given the supportive ongoing bipartisan climate toward infrastructure spending.


Support Services: UK analysts Matthew Walker and Aynsley Lammin believe that companies exposed to Obamacare could suffer under Trump, but those exposed to increased border protection, expansion of immigration detention centres and increased defense contracting could benefit.


Prison REITs: US analyst Ryan Meliker believes that Trump would be a positive for prison REITS, as Trump said that he would triple the number of private prisons. A Clinton victory would be received negatively, as she has stated the intention to end private prison contracts.


Healthcare: Canadian analyst Neil Maruoka believes that Trump represents the status quo for spec pharma companies, while a Clinton presidency could devolve into a war over public perception of the drug industry.


Precious Metals: If Trump wins and overturns trade agreements like NAFTA, Canadian analyst Eric Zaunscherb believes it could generate downward pressure on the CAD and Mexican peso with positive implications for precious metals producers in those countries. If some citizens respond violently to an allegedly rigged or stolen election, gold could appreciate as a safe haven.


Quest®, Canaccord's research model: Under Clinton, our Quest® team would stick with an evenly weighted Value, Quality and Momentum triAngle approach. Under Trump, they would be more inclined to weight the triAngle heavily to Quality in order to shield investors from short-term uncertainty and volatility.

 

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