Donald Trump is the first U.S. president in history to come from an exclusively private sector background. During the campaign, candidate Trump promised to run the country like a business—with vows to create a friendlier environment for domestic companies. So far, he has made regulatory reform a top priority. And though the process of realizing his vision won’t be without its challenges, it’s also clear that corporate America will be operating under a new set of rules. What might this mean for financial markets and, ultimately, your portfolio?
CIO Wealth Management Research (CIO WMR) presents the fourth report in a series of six entitled “POTUS 45: The implications of regulatory reform.” It explores how certain sectors—particularly financials, healthcare and energy—could be impacted by policy changes and outlines where the most compelling investment opportunities will lie.
- Financials—It is estimated that the largest banks have as much as $130 billion of excess capital that could be unlocked by regulatory reform. Capital could be redeployed through stock buybacks, dividends or investment in growth.
- Healthcare—While bringing mixed results, the repeal of Obamacare would be mostly positive for insurance companies according to CIO Wealth Management Research (CIO WMR). Insurers are expected to have more flexibility over product offerings and pricing as well as benefit from potentially lower taxes.
- Energy—By reducing the regulatory burden across the board, CIO WMR expects ongoing growth of production across all sources of energy including oil, gas, wind and solar. Companies in long haul oil and natural gas pipelines are likely to benefit most in the short term.
- Talk to your UBS Financial Advisor about how your portfolio can be best positioned for future policy changes and market movements.
On tax reform, CIO WMR expects a reduction in the corporate tax rate from 35% to potentially 25%. And when it comes to infrastructure spending, President Trump has mentioned a $1 trillion package over ten years, but actual spending is likely to be closer to $400 billion over ten years, according to CIO WMR. Despite the benefits of regulatory reform across various sectors, U.S. growth could suffer as the negative impact from new trade barriers, tighter immigration and an uneven foreign policy erode the positive effects of the pro-growth agenda.
How could new administration policies impact your financial future?
Together we can find an answer. Connect with your UBS Financial Advisor or find one.