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Markets celebrate Joe Biden, who was elected the 46th president of the United States on November 7. And they do so with vigorous increases, in all corners of the globe, from the United States to Japan to Europe. With the tech world, in particular, toasting a potentially divided Congress between conservatives and Republicans (a hypothesis that pushes away the dreaded increase in corporate income taxes to 28%). But there are sectors that, in addition to technology, promise to perform better under democratic administration, such as infrastructure, renewable energy or luxury. And in the 2021 portfolio there will also be room for Italian stocks.
The scene: Stock markets reassured by Biden
What the markets seem to like the most is the hypothesis of a divided US Congress, with the Senate that should remain in the hands of the Republicans (50 seats against 48 after Trump’s victory in Alaska), although only the final result will be known. after the two votes in Georgia scheduled for January.
The stock exchanges seem calm about the content that the fiscal policy of the new Biden administration could have – explains Andrea Conti, Eurizon’s macro-research-. With a Congress that must mediate democratic and republican demands, the interventions will presumably be less penalizing for the companies than a scenario, assumed on the eve of the elections, of total victory for the democrats.
Divided government and the benefits for markets
Colin Moore, global chief investment officer at Columbia Threadneedle Investments, echoes this, and is convinced that for many investors, a divided government is the preferred outcome, as it is more difficult for a president or political party to implement their ideas. more radical. And then if we look at more recent history, markets have offered better returns during progressive administrations. Under Barack Obama, for example, Wall Street showed an annualized performance of about 14%, compared to about 12% under Donald Trump (the highest performance in the last four Republican presidencies). But what sectors and titles will benefit the most from a democratic presidency?
The push for clean energy technologies
Biden’s plan calls for higher federal spending and greater tax incentives to create jobs and fuel economic development by rebuilding critical infrastructure. A push that would focus on reducing carbon emissions and investing in clean energy technologies, experts T. Rowew Price report in a note. A program of $ 2 billion, of which 1.3 billion for renewable energy, which if implemented could have a positive impact on companies specializing in air compressors, railways, commercial aircraft, electric vehicles, industrial gases, as well as the materials industry of construction and cement manufacturers. Among these, the Italian Buzzi Unicem deserves special attention, who reacted to the news of Biden’s victory with a rise of 4.22%, accumulated in three days (action from November 9 to 11). And Interpump and Prysmian also ended up under the lens of administrators and analysts, the latter rated by Mediobanca Securities with a superior performance rating.
Enel, Eni, Erg and Falck: bets in Piazza Affari
Also, the great attention of the newly-elected Democratic president could give renewables a good shakeup. Biden’s agenda includes another $ 2 trillion to be allocated to the environment through incentive plans for a total shift to renewable energy and to achieve zero CO2 emissions by 2050. The world’s leading wind and solar energy giants, like the Spanish Iberdrola or the German Rwe. In Italy, on the other hand, the focus is above all on Enel, which for some years has already launched a conversion plan towards renewable energies. The company led by Francesco Storace is also accompanied by Erg and Falck Renewable, which among other things recently signed an agreement with Eni for the development of a renewable project in the US that involves the purchase of Building Energy.
