US Elections 2016, the day after: Markets stabilise

Markets bet on sectors like banking, healthcare

Singapore manufacturing and precision engineering firm Guoxin Manufacturing won its first clients in the United States last year - and is untroubled at Mr Donald Trump's election as the next US president.

The private firm drew about 20 per cent of its revenue from the US last year and is in talks with partners there on supplying parts for the aerospace industry.

"I'm not too worried as our business is diversified... I believe there will still be opportunities in avionics business in the US, for example," said managing director Richard Foo, given a potential lift in the US' defence spending under Mr Trump.

Much uncertainty remains over Mr Trump's economic policies, but that did not stop markets from taking bets on sectors that could benefit based on his campaign promises.

Going by initial trade on US stock markets, the winners seem to be the banking, healthcare, defence, infrastructure and energy sectors.

The S&P500 index swung from negative to positive and closed 1.1 per cent higher on Wednesday, driven by drug and financial counters.

Healthcare shares rallied, with firms like Pfizerand Celgene all posting rises now that Democratic nominee Hillary Clinton will not get to carry out her vow to control drug prices.

Meanwhile, the prospects of a lighter financial regulatory burden lifted US banking stocks including Wells Fargo & Co and Bank of America. "The potential easing of regulatory burden will reduce compliance costs; that'll have a wider spillover effect beyond the US... US banks could also indirectly gain from efforts to rejuvenate various sectors and be in a better position to take care of their global business," said Mr Vishnu Varathan, Mizuho Bank head of economics and strategy.

Mr Trump's pledge to "fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals" in his victory speech could bode well for infrastructure.

"From raw material suppliers to brick-makers, they could benefit... If the world's largest economy spends a lot of money, albeit most of it domestically, it will still create some opportunities," noted CIMB Private Bank economist Song Seng Wun.

As much as Mr Trump's promise to revive the coal and oil and gas industries is driving optimism in the energy sector, it is depressing the renewable energy industry, such as solar panel-makers.

Mr Varathan said oil refiners and rig builders here will likely stay under pressure as any bid to boost the US oil and gas sector may add to global supply and keep oil prices low.

Should Mr Trump act on his protectionist anti-free trade rhetoric, then exporters stand to lose out.

The Association of Small and Medium Enterprises (Asme) highlighted the Trans-Pacific Partnership (TPP) agreement championed by President Barack Obama as key in lifting business cooperations.

Asme president Kurt Wee noted: "The TPP allows Singapore firms to participate in US procurement exercises... We hope it would be carefully reviewed and not just scuppered."

Investors are now awaiting concrete plans as Mr Trump prepares to take office.

OCBC Bank economist Selena Ling said: "He takes office in January. It may take him a while to get his Cabinet in place and start to change things, so I think any impact will likely be felt towards the middle of next year."

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A version of this article appeared in the print edition of The Straits Times on November 11, 2016, with the headline Markets bet on sectors like banking, healthcare. Subscribe