• Research Tree
  • Features
  • Pricing
  • Events
  • Reg.News
  • Short Interest
  • Explore Content
    • Explore

      • Providers
        • Providers

          • Free/Commissioned
          • High Net Worth Offering
          • Institutional Offering

          Free/Commissioned

          Research that is free to access for all investors. Companies commission these providers to write research about them.

          View Research

          What is our Main Bundle Offering?

          Brokers who write research on their corporate clients and make it available through our main bundle offering.

          View Research

          What is Institutional?

          Research that is paid for directly by asset managers. Only accessible to institutional investors permissioned for access.

          View Research
      • Regions
        • Regions

          • UK
          • Rest of EMEA
          • N America
          • APAC
          • LatAm
      • Exchanges
        • Exchanges

          • Aquis Apex
          • Australian Securities Exchange
          • Canadian Securities Exchange
          • Euronext Paris
          • London Stock Exchange (domestic)
          • SIX Swiss Exchange
      • Sectors
        • Sector Coverage

          • Building & Construction
          • Discretionary Personal Goods
          • Discretionary Retail
          • Energy
          • Health
          • Investment Trusts
          • Media
          • Resources
          • Technology
      • Small / Large Cap
        • Small / Large Cap

          • UK100
          • UK250
          • UK Smallcap
          • UK Other Main Markets
          • Other
  • Login
  • Sign Up
LIVE

Event in Progress:

Join Here ×
  • 08 Jan 17
title

Implications of Trumponomics for equities

  • 2754 views
The Naked Fund Manager

UK-focused Small and Mid-cap fund manager.

 
Trumponomics Trump impact on UK equities
Strap line

Attractive corp tax regime, and dovish on energy, infrastructure, and bank regs

Companies: FOUR, AHT, BLTG, BMS, BUR, CHG, COB, HNG, HILS, HTG, 0QMW, MCRO, NFG, PWTN, ULE, VCT, WEIR


Body

 

Happy New Year all,

 

I had some interesting feedback from readers on the theme of my very first blog.   In particular, there was interest in further exploring my high-level comments on Trumponomics and the potential rotation out of defensive ‘yieldy’ stocks.  These will certainly be pertinent themes in 2017 and are worthy of further consideration. I'll cover my high-level thoughts on Trumponomics in this blog and next week I plan to dive a little deeper into dividends and dividend coverage.


Trumponomics 

Trumponomics will be a driver of market and stock behaviour in 2017. Therefore, while it is impossible to predict how, or even whether, Trump’s views may eventually end up as US policy, it is nevertheless worthwhile considering in broad terms how different sectors might be affected.  I have also suggested a few companies that may be worthy of further investigation (although none of the below is investment advice!).

 

Below is a list of potential scenarios a Trump presidency could herald, the impact on various sectors and the stocks in my universe that are worth considering as a result:


  • Corporate tax cuts, a repatriation tax and strengthening dollar - Lower corporation tax and an attractive 10% repatriation tax on the roughly $1trn of US corporates cash held in foreign jurisdictions is naturally a broad positive for US corporates. How would the repatriated cash be deployed?
    • Implications for equities. The repatriation tax (if it takes place) will mostly benefit large US tech companies, but lower corporation tax would be good for lots of UK listed companies: Micro Focus, Blancco, 4imprint, Burford, Ashtead (90% US earnings), Victrex, TLA Worldwide, Next Fifteen. Especially TLA and 4imprint where virtually all profits are in the US (65% of earnings for TLA).
    • Also asset managers with GBP cost bases and USD AUM should benefit.
  • Strong dollar to increase input costs - The other side of the strong USD coin is that input costs will keep rising if USD strengthens, hurting retailers and any companies with a large percentage of costs in USD, eg oil and other commodities. This is especially true for commoditised industries or those with pricing pressure and why I like to own quality companies with a moat and differentiated products that have pricing power so they can pass the cost inflation through to customers.
  • Less M&A from US into UK and Europe - There has been a big uptick in M&A of UK companies by US and European companies since the Brexit sterling slump and this will continue in my view. However, if Trump does offer the repatriation tax, that could be an attractive alternative for much of that capital. This could be more prevalent in the Tech sector as most of these enormous war chests held outside the US belong to Tech companies.
  • Energy self-sufficiency - US oil and gas is perhaps the most obvious beneficiary of Trump's desire for energy self-sufficiency and a more lax approach to environmental considerations. Although, there are far more complex factors including the strength of the USD and OPEC’s and Russia's stance.
    • Implications for equities. The rising oil price, a tentative agreement from OPEC/Russia and a supportive US government, will bring an increase in shale activity from current "life support" levels. In UK equities, Oil Services are the main way to play this, which means Hunting and Weir Group.
  • Climate change scepticism - In utilities, Trump’s scepticism of climate change and green energy needs to be considered for those most committed to these initiatives.
    • Implications for equities. The upshot in my view for this scenario is mainly losers in renewables and winners in oil and gas, as above.
  • Infrastructure plans - A $1trn spending plan would naturally feed through positively to the US construction and building materials sectors. Non-US firms which operate or export into the US should also benefit.
    • Implications for equities. A clear beneficiary of increased infrastructure spending in both the US (and the UK) would be Hill & Smith which generates nearly a 1/3rd of sales and just under half its profits in the US. It is achieving a 19% pre-tax ROI and a c.4% FCF yield.
  • A further point to make regarding infrastructure is that metal commodity producers (of the non-precious variety) should be beneficiaries, although I'm not sure of the best way to play this.
  • Softening Bank Regulation - Trump has suggested that he is not a fan of overburdening industries with regulation. In the banking sector, a rolling back of reforms such as Dodd-Frank and the Volcker Rule could reduce compliance costs and increase profitability (at the expense of a potentially higher risk premium demanded by investors). While positive and steeper yield curves create a more natural operating environment for banks and insurers.
    • Implications for equities. The main entities to profit here are US banks, therefore I'm not sure there's a good way to play this with UK equities.
  • NATO defence spending to increase - The Aerospace and Defence sectors could experience a positive tailwind as members of NATO increase their spending as a consequence of being less able to rely on the might of the US.
    • Implications for equities. A rise in Aerospace and Defence spending should be positive for the likes of Ultra, Cobham and Chemring.
  • Reworking of Obamacare - While Clinton had proposed a programme to control the pricing of pharmaceutical drugs, it seems Trump has no such plans, which should be a broad positive for pharma and some biotech. A re-working of Obamacare will have different impacts – potentially beneficial to some health insurance providers.
    • Implications for equities. I include this as a high-level point, but it isn't my area, so I have no idea, unfortunately!
  • Protectionism - Trump’s protectionist views may have adverse consequences for some.  Reduced global trade flows could be negative for freight shipping (by sea and air).  Autos could also be impacted.
    • Implications for equities. An era of protectionism (however unlikely in my view) would be bad for global trade, but mostly this would affect large-caps such as freight forwarders (Panalpina and Kuehne & Nagel) and shipping related companies (Braemar).
  • Longer-term - In the longer term, a major consideration will be the inflationary pressures and expected credit growth resulting from Trumponomics and how the Fed might react in response. Plus the impact of protectionist policies on global trade and US relationship with China.

-----

 

To read a brief outline of how I think about stocks, and what I aim to achieve in this blog, please check out my first blog where I set out my stall.

 

Please Note: To be clear, I do not and will not ever give any advice. I will rarely mention individual stocks but when I do these will not be recommendations, instead just my thoughts at that point in time. 


Body Two

Body Three

Body Four

Body Five

The information contained within this post is based on personal experience and opinion and should not be considered as a recommendation to trade nor financial advice.

More Content

More Content

4imprint Group:Holding steady against uncertain backdrop

Companies: 4imprint Group plc

Edison

Most popular equity research this week | 19-23 Feb

Companies: RLWAPCBMSCRPRSNXLLOYTCNFA/TRAKJET2DNLMEUSPGETBFDMAA/GLEW7LB90HCHOFE3C

Research Tree

4imprint Group (FOUR LN) - Solid performance in a volatile and unpredictable environment - Corporate

Companies: 4imprint Group plc

Zeus Capital

Braemar (BMS) Half Year 2025 results presentation - November 2024

Companies: Braemar PLC

PIWORLD (hosted by Progressive)

Next 15 Group PLC

Companies: Next 15 Group plc

H2 Radnor
next
 
Research Tree
Useful Links
  • Features
  • Pricing
  • RNS/Newswires Feeds
  • Providers Hub
  • Company Hub
  • Stock Pick League
  • Chrome Extension
  • iOS and Android Apps
Account
  • Login
  • Join Now
  • Contact
  • Follow us on Linkedin
  • Follow us on X

© Research Tree 2025

  • Apple Store
  • Play Store
  • Terms of Service
  • Privacy Policy and Statement on Cookies

Research Tree will never share your details with third parties for marketing purposes. Research Tree distributes research documents that have been produced and approved by Financial Conduct Authority (FCA) Authorised & Regulated firms as well as relevant content from non-authorised sources, who are not regulated but the information is in the public domain. For the avoidance of doubt Research Tree is not giving advice, nor has Research Tree validated any of the information.

Research Tree is an Appointed Representative of Sturgeon Ventures which is Authorised and Regulated by the Financial Conduct Authority.

Top
  • Home
  • Features
  • Pricing
  • Event Hub
  • Reg.News
  • Short Interest Tracker
  • Explore Content
    • Regions
      • UK
      • Rest of EMEA
      • N America
      • APAC
      • LatAm
    • Exchanges
      • Aquis Apex
      • Australian Securities Exchange
      • Canadian Securities Exchange
      • Euronext Paris
      • London Stock Exchange (domestic)
      • SIX Swiss Exchange
    • Sectors
      • Automobile Industry
      • Banks
      • Building & Construction
      • Chemicals
      • Discretionary Personal Goods
      • Discretionary Retail
      • Energy
      • ETFs
      • Financial Services
      • Food & Drink
      • Food Production
      • Health
      • Household Goods & DIY
      • Industrial Equipment, Goods & Services
      • Insurance & Reinsurance
      • Investment Trusts
      • Leisure, Tourism & Travel
      • Media
      • Open-ended Funds
      • Other
      • Real Estate
      • Resources
      • Staple Retail
      • Technology
      • Telecoms
      • Utilities
    • Small / Large Cap
      • UK100
      • UK250
      • UK Smallcap
      • UK Other Main Markets
      • Other
    • Private/EIS
      • EIS Single Company
      • EIS/SEIS Funds
      • IHT Products
      • SEIS Single Company
      • VCT Funds
  • Providers
    • Free/Commissioned
      • Acquisdata
      • Actinver
      • Actio Advisors
      • Asset TV
      • Atrium Research
      • Baden Hill
      • BlytheRay
      • BNP Paribas Exane - Sponsored Research
      • Bondcritic
      • Brand Communications
      • BRR Media
      • Calvine Partners
      • Capital Access Group
      • Capital Link
      • Capital Markets Brokers
      • Cavendish
      • Checkpoint Partners
      • Clear Capital Markets
      • Couloir Capital
      • Doceo
      • Edison
      • Engage Investor
      • Equity Development
      • eResearch
      • First Equity
      • Five Minute Pitch TV
      • focusIR
      • Fundamental Research Corp
      • Galliano’s Latin Notes
      • GBC AG
      • goetzpartners securities Limited
      • Golden Section Capital
      • GreenSome Finance
      • GSBR Research
      • H2 Radnor
      • Hardman & Co
      • Holland Advisors
      • Hypothesis Research
      • InterAxS Global
      • Kepler | Trust Intelligence
      • London Stock Exchange
      • Longspur Clean Energy
      • Mello Events
      • Messari Research
      • NuWays
      • OAK Securities
      • Oberon Capital
      • Optimo Capital
      • Panmure Liberum
      • Paul Scott
      • Peel Hunt
      • PIWORLD (hosted by Progressive)
      • Proactive
      • Progressive Equity Research
      • Quantum Research Group
      • QuotedData
      • Research Dynamics
      • Research Tree
      • Resolve Research
      • SEAL Advisors Ltd
      • ShareSoc
      • Shore Capital
      • Sidoti & Company
      • Small Cap Consumer Research LLC
      • StockBox
      • Tennyson Securities
      • The AIC
      • The Business Magazine Group
      • The Edge Group
      • The Life Sciences Division
      • Trinity Delta
      • Turner Pope Investments
      • UK Investor Group
      • ValueTrack
      • Vox Markets
      • VRS International S.A. - Valuation & Research Specialists (VRS)
      • VSA Capital
      • Winterflood Securities
      • Yaru Investments
      • Yellowstone Advisory
      • Zacks Small Cap Research
      • Zeus Capital
    • High Net Worth Offering
      • Fox-Davies Capital
      • ABG Sundal Collier
      • ACF Equity Research
      • Align Research
      • Allenby Capital
      • AlphaValue
      • Alternative Resource Capital
      • Arctic Securities
      • Arden Partners
      • Auctus Advisors
      • Baptista Research
      • BNP Paribas Exane - Sponsored Research
      • Canaccord Genuity
      • Cavendish
      • Couloir Capital
      • Degroof Petercam
      • Dowgate Capital
      • First Berlin
      • First Equity
      • First Sentinel
      • Greenwood Capital Partners
      • Hannam & Partners
      • Hybridan
      • Kemeny Capital
      • Longspur Clean Energy
      • Louis Capital
      • Magnitogorsk Iron and steel works
      • Medley Global Advisors
      • Northland Capital Partners
      • OAK Securities
      • Oberon Capital
      • Panmure Liberum
      • QuotedData Professional
      • Shard Capital
      • ShareSoc
      • Shore Capital
      • Singer Capital Markets
      • SP Angel
      • Stanford Capital Partners
      • Stifel FirstEnergy
      • Stockdale Securities
      • Tamesis Partners
      • Tennyson Securities
      • The Life Sciences Division
      • Turner Pope Investments
      • VSA Capital
      • Whitman Howard
      • Yellowstone Advisory
      • Zeus Capital
    • Institutional Offering
      • Fox-Davies Capital
      • ABG Sundal Collier
      • ACF Equity Research
      • Acquisdata
      • Allenby Capital
      • Alternative Resource Capital
      • Arctic Securities
      • Arden Partners
      • Auctus Advisors
      • BNP Paribas Exane
      • Bondcritic
      • Canaccord Genuity
      • Capital Access Group
      • Capital Link
      • Cavendish
      • Couloir Capital
      • Degroof Petercam
      • Dowgate Capital
      • Edison
      • First Berlin
      • First Equity
      • First Sentinel
      • Five Minute Pitch TV
      • Fundamental Research Corp
      • Galliano’s Latin Notes
      • GBC AG
      • Golden Section Capital
      • Goodbody
      • Greenwood Capital Partners
      • Hannam & Partners
      • Holland Advisors
      • Hybridan
      • InterAxS Global
      • Investec Bank
      • Kepler | Trust Intelligence
      • Numis
      • NuWays
      • OAK Securities
      • Oberon Capital
      • Panmure Liberum
      • Peel Hunt
      • QuotedData
      • QuotedData Professional
      • Research Dynamics
      • Research Tree
      • Shard Capital
      • Shore Capital
      • Sidoti & Company
      • Singer Capital Markets
      • Small Cap Consumer Research LLC
      • SP Angel
      • Stanford Capital Partners
      • Stifel
      • StockBox
      • Tamesis Partners
      • Tennyson Securities
      • The AIC
      • The Business Magazine Group
      • The Life Sciences Division
      • ValueTrack
      • Velocity Trade
      • VSA Capital
      • Winterflood Securities
      • Zacks Small Cap Research
      • Zeus Capital
  • Contact
  • Sign Up
  • Sign In