As Kamala Harris and Donald Trump face off against each other in a debate for the first time in the race for the White House on November 5, investors will be scouring for clues on policy which could impact their portfolios.
One of the world’s largest independent financial advisory and asset management organisations, deVere Group, says this is a pivotal moment for US and global investors to position themselves to seize opportunities and mitigate potential risks to their wealth.
“The US election will have far-reaching implications on sectors such as renewable energy, electric vehicles (EVs), defence, and traditional energy,” says deVere CEO Nigel Green.
“Investors must be prepared for a Harris victory, which would push clean energy, housing support, and cannabis stocks into the spotlight, or a Trump win, which would benefit sectors like oil, defence, and cryptocurrency.”
Harris has championed a transition to greener energy, making her presidency a tailwind for renewable energy companies. Similarly, the electric vehicle sector is poised for growth, benefiting from favourable regulatory and tax policies.
Her stance on China trade relations is another critical element for investors.
“While the US-China relationship has been fraught with tensions in recent years, a Harris administration is expected to take a more measured approach, hopefully avoiding the escalatory rhetoric seen under Trump.
“This could be a positive sign for companies with large Chinese exposure, like Tesla and Apple, as well as chipmakers such as Nvidia and Qualcomm,” notes Nigel Green.
Harris’ commitment to housing is another area for investors to focus on. Her proposed policies include down-payment support for first-time homebuyers and tax incentives for builders working on affordable housing.
“As such, homebuilders may see a surge in demand under a Harris administration, providing excellent opportunities for growth in the housing sector.”
Should former President Donald Trump secure victory in the November election, a shift in focus is probable toward traditional energy sectors.
“Trump’s commitment to rolling back regulations on oil production and exploration would likely benefit companies like Exxon and Chevron.
“On the other hand, clean energy and EV companies, which have seen a favourable policy environment under the Biden-Harris administration, could face headwinds. Companies in these sectors may experience market volatility if Trump repeals existing tax credits for EV buyers.”
Defence contractors are another group of companies that stand to gain from a Trump victory. Historically, Republican administrations have prioritised defence spending, and investors could see stocks in this sector surge as defence budgets potentially expand.
Trump’s changing stance on cryptocurrency is also noteworthy.
“After years of scepticism, the former president has now embraced digital assets, pledging to make the US the ‘crypto capital of the world. Therefore, cryptocurrencies like Bitcoin, can be expected to gain further traction under a pro-crypto administration.”
Given the potential for market volatility, investors should consider the following strategies ahead of the debate.
“There will be clear winners and losers – and these will become more evident from the outcome of this evening’s debate.”
While certain sectors will benefit depending on the outcome, diversifying portfolios across industries can help mitigate risk and capture gains, no matter who wins.
Amid heightened volatility which elections bring, some investors may want to consider allocating assets to safe havens such as gold or Treasury bonds to hedge against near-term market fluctuations.
With uncertainty surrounding the election and markets jittery from external factors, this presidential debate is a crucial moment for investors to reassess their strategies.
“Whether it’s capitalising on clean energy’s continued to rise under Harris or betting on the resurgence of traditional energy and defence under Trump, now is the time for investors to be vigilant and preparing to rebalance their portfolios should it be necessary to do so,” says Nigel Green.
