Metal to medicine – Trump era looks good for some investments

‘Uncertainty provides opportunity’ for investors as US prepares for next four years

Trump presidency could work for investors who know where to look in the developing world. Photograph: Reuters

Trump presidency could work for investors who know where to look in the developing world. Photograph: Reuters

 

Donald Trump’s victory in US presidential elections may be good news for investors who know where to look in the developing world.

The Turkish owner of Istanbul’s Trump Towers, Russian businesses brought in from the cold as relations thaw with Washington and Indian drug makers freed from the threat of a pricing crackdown touted by Hillary Clinton are among their top picks.

“Uncertainty provides opportunity,” Mark Mobius, the executive chairman of Templeton Emerging Markets Group, said. “With Trump coming, we haven’t pulled back on our buying.”

Here are some of the investments that may emerge as winners from a Trump presidency:

Russia

Trump’s pledge to improve relations with Russia may lead to easing of international sanctions imposed after the country annexed Crimea in 2014. That will allow “Russian businesses to more easily finance themselves,” said Michael Levy, emerging-market investment director at Barings in London, which oversees about $35 billion (€32.1bn).

Russia’s Micex index of stocks rose about 4 per cent in two days, compared with a drop of 3 per cent for the MSCI Emerging Markets Index.

The ruble will probably beat counterparts in the region, according to Société Générale SA’s London-based strategist Phoenix Kalen.

Turkey

Turkish Conglomerate Dogan Sirketler Grubu Holding, a company with stakes in industries from insurance to energy and broadcasting, owns two towers with Trump’s name on them in Istanbul.

Investors are speculating that the company, owned by Turkish billionaire and media mogul Aydin Dogan, may now be more sheltered from an ever-widening political crackdown in Turkey because of its link to the US president-elect, according to Haydar Acun, the managing partner at Istanbul-based Marmara Capital.

The holding company surged as much as 16 per cent on Wednesday to a one-month high before slipping 1.2 per cent a day later.

India

Indian pharmaceutical companies, collectively the second-biggest suppliers of generic medicines to the US, are among the worst-performing stocks in Mumbai this year as the Department of Justice probed the industry for price collusion.

Hillary Clinton had criticised ballooning charges for medicines. Sun Pharmaceutical Industries, which received a subpoena from the DOJ over drug pricing, rose 4 per cent on Wednesday, the most since May 27th.

Drug makers with the biggest exposure to the US “could be winners”, said Hertta Alava, head of emerging markets at FIM Asset Management in Helsinki, who is looking to add individual stocks on Trump’s victory.

Metal producers

Prices have surged since the election, sending copper up to a 16-month high on speculation Trump will fulfil his pledge to increase spending on infrastructure. Trump’s victory has prompted “metal-price euphoria around the globe,” according to Andrey Lobazov, a strategist at Aton in Moscow.

South Korean steelmaker Posco and Brazil’s Vale both surged more than 5 per cent on Thursday.

Developing Europe

Closer trade ties with Europe help insulate these countries from a more protectionist US president, according to Raiffeisen Bank International and Rabobank.

Nomura International included Hungarian assets in a “positive bucket” of investments that may outperform.

Franklin Templeton Investments said Poland is “relatively protected” from fallout if Trump carries through with pledges to cut trade. Poland’s zloty and Hungary’s forint have dropped about 1 per cent in the last two days against the euro, compared with almost 5 per cent for the Brazilian real and 10 per cent for the Mexican peso.

Egypt

Egypt floated the pound this month, prompting a 50 per cent currency depreciation and removing one of the biggest disincentives to investing in the country.

President Abdel-Fattah El-Sisi, seeking closer ties to the US, was among the first world leaders to congratulate Trump.

Egypt has the cheapest currency in emerging markets, “with much higher interest rate support”, said Charles Robertson, Renaissance Capital’s global chief economist in London.

Bloomberg