2024-07-08 01:48:15
U.S. stock market solar-related stocks plunge, promising stocks in finance, oil, defense, and healthcare emerge
’Anything But Biden (ABB).’
As former President Donald Trump won a landslide victory over President Joe Biden in the US presidential debate on June 27 (local time), attention is focused on the policy direction likely to be pursued if a ‘Trump 2nd administration’ is launched. As Biden emphasized ‘Anything But Trump (ABT)’ in order to erase Trump’s traces immediately after his inauguration in 2021, if Trump is re-elected in this year’s presidential election, it is expected that he will reverse Biden’s policies. In response, sectors divided into ‘Trump beneficiaries’ and ‘Trump victims’ in the stock market are showing opposing movements (see table).
Sunnova Energy and Sunpower ↓10%
The sector that will experience the most dramatic changes when Trump returns is considered to be ‘environmentally friendly’. Trump has pledged to repeal the Inflation Reduction Act (IRA), Biden’s main environmental policy, if he is re-elected. In his pledge book, ‘Agenda 47’, he also defined the Biden administration’s Green New Deal policy as a “Green New Hoax” and presented pledges such as expanding fossil fuel production and easing automobile fuel efficiency regulations.
Meanwhile, as Trump was evaluated to have the upper hand in the first presidential debate, eco-friendly energy-related stocks such as solar energy showed a simultaneous downward trend. On July 3 (based on the closing price), Sunnova Energy ($5.56) and SunPower ($2.68) on the New York Stock Exchange fell 14.6% and 11.56%, respectively, compared to June 27, recording a decline in the 10% range. During the same period, First Solar ($-7.5%, $231.11), Inphase Energy ($-5.76%, $99.17), and NextEra Energy ($-2.57%, $71.83) also showed sluggish stock price trends. In Korea, Hanwha Solutions and CS Wind were affected.
On the other hand, there are sectors that are expected to benefit if Trump is re-elected. ‘Finance’ is a representative example. Unlike Biden, Trump promoted the relaxation of the ‘Volcker rule’, which limits risky investments by financial institutions and suppresses their large-scale expansion, during his term. Accordingly, if Trump is elected, it is expected that policies that ease financial institution regulations will be re-promoted. Oh Han-bi, a researcher at Shinhan Investment & Securities, analyzed on July 2 that “Trump’s deregulation keynote and economic stimulus stance are positive for the financial sector.” In line with this outlook, stock prices of financial stocks such as Wells Fargo (5.64%), JP Morgan Chase (4.77%), Citigroup (4.72%), Morgan Stanley (4.62%), and Bank of America (4.2%) rose significantly on the New York Stock Exchange after the presidential debate (July 3 compared to June 27). Trump also showed a friendly attitude toward cryptocurrencies, saying, “I will guarantee the future of Bitcoin,” which led to an increase in the prices of exchange-traded funds (ETFs) such as Coinbase and the ‘iShares Bitcoin Trust.’
Other stocks that benefit from Trump include traditional energy such as oil, which is a trade-off against eco-friendly energy, defense industry related to increased protectionism and global political instability, and healthcare, which is expected to open its market due to the abolition of Obamacare and the activation of biosimilars. In the traditional energy sector, ExxonMobil, Chevron, Baker Hughes, and Occidental Petroleum are mentioned as related stocks on Wall Street, in the defense sector, Lockheed Martin, General Dynamics, and RTX (Raytheon Technologies), and in healthcare, UnitedHealth, Humana, Eli Lilly, Merck, and AbbVie are mentioned as related stocks.
“10% universal tariff is disadvantageous to Korea”
In the domestic stock market, it is expected that there will be more stocks that are affected by Trump than stocks that benefit from it. In the case of financial stocks, there is a high possibility that they will move in conjunction with the United States, but the basic direction of protectionism could cause major Korean industries such as automobiles and secondary batteries to suffer. Given the export-oriented nature of Korean industries, there is a high possibility that Trump’s re-election will have a negative effect.
Yeom Seung-hwan, an executive director at LS Securities, said, “Trump has pledged to impose an additional 10% universal tariff on all imports if elected,” adding, “Given that Korea’s exports to the U.S. have increased compared to the past, this basic direction can only be detrimental to Korea.” Director Yeom continued, “Biden has only advocated America First policy for core industries, but Trump is showing this policy tone across all industries,” adding, “Considering the fact that the domestic stock market continued to decline during Trump’s term in 2018-2019, it can be said that Biden being elected is more advantageous for Korea than Trump.”
*If you search for ‘Magazine Donga’ and ‘Twovengers’ on YouTube and portals respectively and follow them, you can find a variety of investment information, including videos in addition to articles.
[이 기사는 주간동아 1447호에 실렸습니다]
Lee Seul-ah, Weekly Donga Reporter [email protected]
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2024-07-08 01:48:15