Market Views: Top 3 assets likely to gain if Harris wins
The presidential candidate debate between Kamala Harris and Donald Trump earlier this week was the first -- and maybe the last -- big opportunity for the vice president to show her stance on a range of topics in front of not just a national, but a global audience.
Most media reports acknowledged that Harris bested Trump in the highly anticipated debate, even though neither candidate spent too much time talking about policies or what they would do if elected to office.
While Harris may benefit from a sentiment boost after the debate, the race to the White House remains too close to call.
With just under two months to go until the elections, investors around the world will be watching how both campaigns unfold over the next few weeks.
We earlier asked asset managers what assets could gain if Donald Trump won the November elections.
Now, AsianInvestor asks a host of investment experts about what assets could benefit if Harris emerges victorious.
The following responses have been edited for clarity and brevity.
Christy Tan, investment strategist
Franklin Templeton Institute
Historically, elections and politics did not mean much to long-term portfolio returns.
US and global equity markets have thrived and faced setbacks under Republican and Democratic control in Washington.
Sweeping policy changes are unlikely, no matter who wins the election. This is not a contest between two competing economic ideologies.
Each candidate’s proposals are targeted and incremental, not the kind of sea change that was the case when, for example, President Ronald Reagan and Federal Reserve Chair Paul Volcker arrived on stage in the early 1980s.
But other takeaways are also important, particularly at the sector level. The fossil fuel and pharmaceutical industries will likely welcome a Trump presidency, as they could see less regulation (fossil fuels) or greater pricing freedom (pharma) under Trump.
A Harris presidency will likely offer more support for renewable energy and housing (given her stated aim to boost residential construction via incentives).
Gary Dugan, CEO
The Global CIO Office
Interest rate-sensitive stocks should do well. The markets assumption is that Harris’s policies are less likely to create an inflation surprise and hence the Fed should continue on a steady path of cutting interest rates.
We would be buyers of banks and selective REITS (real estate investment trusts). Consumer discretionary stocks should benefit.
Renewable energy stocks would benefit from a pro-ESG (environment, social and governance) administration.
The strong growth of AI requires data centres that are heavy consumers of energy. Hence new sources of energy are urgently needed. Renewable energy aligns with the Democrate ESG values.
Housing stocks could also gain. Harris has committed to helping first time buyers with funding their first purchases and promoting the building of new affordable housing.
David Gibson-Moore, President & CEO
Gulf Analytica
If Kamala Harris wins the US elections, several assets could benefit from her policy priorities, particularly those focused on social equity, environmental sustainability and technological innovation.
Renewable energy stocks are likely to gain, as Harris has been a strong advocate for aggressive climate action.
This would pave the way for increased federal investments in clean energy sources like solar, wind and green infrastructure.
The healthcare sector would also see growth given her commitment to healthcare reform. Companies involved in managed care, telemedicine, and biotech, especially those addressing chronic diseases, would stand to benefit from additional funding and policy shifts.
Additionally, the technology sector would likely thrive under Harris, who has emphasised a focus on fostering innovation and regulating big tech.
Smaller tech firms, artificial intelligence companies, and cybersecurity businesses might see a surge as the government invests in digital infrastructure and artificial intelligence-driven solutions.
Jack Janasiewicz, portfolio manager & lead portfolio strategist
Natixis Investment Managers Solutions
With the US elections fast approaching, the race for the White House and control of Congress still appears to close to call.
Because most meaningful legislation requires Congressional approval, a divided Congress would likely limit any platform’s potential effectiveness and impact on markets.
A Harris victory would likely benefit clean energy and electric vehicle makers as the presidential candidate has pledged to “unite Americans to tackle the climate crisis” and hold polluters “accountable” according to her campaign site.
Homebuilders could also see a boost with her proposal to offer up to $25,000 in down payment support for first-time homebuyers and tax incentives for builders who work on starter homes.
And any industry that is heavily dependent on Asia could see relief as the risks for a trade war and tariffs ease.
Ray Sharma-Ong, head of multi-asset investment solutions – Southeast Asia
abrdn
Should Kamala Harris win the presidency, we expect her to protect key policy achievements such as the Inflation Reduction Act (IRA), and the extension of personal tax cuts for those earning less than $400,000 from the 2017 Tax Cuts and Jobs Act (TCJA) due to expire in 2025.
The extension of tax cuts will result in a supporting factor for higher long end US Treasury yields, as the US deficit will be larger compared to if the tax cuts expired.
On trade, Kamala Harris would continue existing national security and industrial policy measures, such as the recent tariff increase on Chinese electric vehicle, battery and semiconductor imports.
This may potentially expand to include controls on tech exports.
Sectors such as autos, staples, semiconductors and chemicals will be affected.
Our position still stays under such a scenario and we favour regions like India and defensive stocks such as Asia REITs (real estate investment trusts), which are less exposed to trade risks and stand to benefit from a lower rate environment.
Another factor would be the composition of Congress.
Should we get a blue wave in congress, we expect the Democrats to push for the reintroduction of their pandemic-era child tax credits and an increase in corporation tax to 28% (currently 21%).
This will be a drag on the bottom line of corporates, and markets will favour stocks with strong margins.
Should we get a split Congress, we expect corporate tax hikes to be blocked, and we expect the US markets to respond positively.
Noel Dixon, senior macro strategist
State Street Global Markets
If Kamala Harris wins the US elections, her tax policy would add to the fiscal deficit.
According to the Congressional Budget Office and our estimates the US debt will increase over $2 trillion in the next decade.
Although this is less than the $5 trillion estimate under a Trump regime, this will still inherently put upward pressure on the long end of the US curve. Our view is that fair value for the US 10-year bond is likely above 4% regardless of who wins.
When we regress a pickup in Harris favourability to the US yield curve, the US 10-year beta that is yielded suggests a marginal pick up in sensitivity to an increase in Harris favourability.
This suggests markets are slightly starting to price in the fiscal reality.
We apply the same regression concept to other asset classes.
Current correlations suggest Harris is negative for the dollar, positive for the S&P 500, gold and oil prices.
Much of this makes sense in a split Congress environment.
Without action from a split Congress, fiscal impulse is set to increase. This will continue to support US growth which should benefit earnings and equities.
The downside is it will put upward pressure on services inflation which should benefit gold as a hedge. The pursuit of a climate change agenda could disrupt energy supply which would keep a floor under oil prices.