Increased exposure to US assets – US funds, American stocks, and dollars – and possibly crypto or gold. These are some tips from experts. Especially if the Republicans take over both the White House and the US Congress in the election.
But the tips come with caveats.
"Investors should prioritize caution and flexibility," writes economist Tiffany Wilding and political expert Libby Cantrill at the American capital manager Pimco in an analysis ahead of the election.
Can complicate interest rate cuts
Promises of lower corporate tax have caused the stock market to follow Donald Trump's opinion polls up and down ahead of the election, notes Elisabet Kopelman, US economist at the major bank SEB.
High tariffs and mass deportations are seen as potentially inflationary and wage-driving. This, together with higher budget deficits, can push up interest rates and the value of the dollar – and thus make it difficult for the US central bank Federal Reserve (Fed) to cut interest rates at the pace currently expected.
And somewhere, you reach a turning point where it can become difficult for the US to attract capital from the rest of the world, warns Kopelman.
Deregulations can benefit industries such as pharmaceuticals, crypto, and finance, believes Danske Bank strategist Maria Landeborn. Reduced exposure to China is another tip:
Trump will be tough on China. He talks about tariffs of 60 percent on all Chinese goods.
Lars Söderfjell, stock manager at Ålandsbanken, believes that small-cap stocks and cyclical stocks with high US exposure will benefit if Trump wins.
And all non-American stocks risk being negatively affected by increased trade barriers, warns he.
But some Swedish export companies may, on the other hand, benefit from a strong dollar and lower US taxes, according to Söderfjell.
Does not believe in oil and gas stocks
Oil and gas stocks are a wild card. A slowdown in the green transition and more fossil energy can push down energy prices. This means margin pressure for the sector.
As an investor, you should not count on Trump's policy benefiting oil stocks. I don't believe that, says Landeborn.
She takes the opportunity to warn against overestimating the election's impact on the stock market.
If the economy is good, the stock market will rise. If we get a weak economy, the stock market will fall. It will do so regardless of whether Donald Trump or Kamala Harris becomes the next US president.
