As trepidation surrounding the 2024 US presidential election and its impact on global equities grows, new quantitative analysis has identified stocks that could see significant movement if Trump wins.
In a white paper published on Thursday, Sydney-based Plato Investment Management revealed that while three Aussie stocks made the top 10 likely “fallers” should Trump win, no Aussie stocks made the top 10 list of potential gainers.
The research – based on correlations between daily betting market movements and daily stock price movements of the largest 10,000 companies in developed markets – named gold miners De Grey Mining, Mineral Resources Limited, and St Barbara Limited as those likely to suffer negative price movements in the event of a Trump victory.
Interestingly, five of the 10 companies named by Plato as the biggest “fallers” are from the gold sub-industry.
According to Dr David Allen, portfolio manager of the Plato Global Alpha Fund, a Trump presidency, characterised by deregulation and tax cuts, could spur economic growth, “creating a headwind for gold, traditionally a safe-haven asset”.
Moreover, also on the list are renewable energy companies, including US-based NextEra Energy Partners and Canada-based Brookfield Renewable Corp.
“It’s also no surprise to see renewable energy companies on the list, given Trump’s well-known opposition to green energy,” Allen said.
Among those predicted to gain from a Trump victory, Plato revealed the list is entirely composed of US stocks.
US deep cyclical energy companies, according to Allen, including Baker Hughes Company, Halliburton Company, and Helix Energy, as well as regional banks like Western Alliance, are likely to thrive benefiting from reduced regulation and lower interest rates.
Rounding out the 10 are super companies like Nvidia.
“The inclusion of several semiconductor companies may seem surprising, given Trump’s mixed stance on Taiwan and potential trade restrictions. However, these companies have a high beta, meaning they tend to outperform the market when it rises,” Allen said.
“If Trump’s policies boost market sentiment, semiconductor stocks could see substantial gains assuming he refrains from punitive trade restrictions.”
Reflecting on Plato’s research methods, Allen said that while various pundit predictions and expert insights on this topic exist, “These crystal ball observations can be seductive, but often miss the mark.”
“Instead of relying on pundits, whose views are often tinted with red or blue, we have applied a more objective approach through the sort of analysis we regularly do as part of the Plato Global Alpha Fund investment process to avoid outsized losses,” he said.
“Global betting markets are constantly synthesising all available information, including real-time polling data, and bettors have a financial incentive to get it right. We think this analysis provides one of the most explicit, unbiased gauges of how stocks could react to either a Trump or Harris victory.”
