The post-election outlook in North America

Jan 23, 2017
<p>Experts weigh up likely winners and losers</p>

This article was produced in association with ELITE Connect. It was originally published on the ELITE Connect platform

Delivering a result that rivaled the Brexit vote in terms of the surprise factor, the success of Donald Trump in the 2016 US presidential election is likely to produce winners and losers in the IR stakes, both from a business and regulation perspective.

Following the result, Brunswick Insight polled Trump supporters to better understand their attitude toward American business, discovering a mix of optimism and caution about the future under the new president.

‘We polled Trump voters in key swing states and find they are very optimistic about the prospects of the US economy, with two in three saying America’s best days are still ahead of it,’ says Sparky Zivin, a partner at Brunswick Insight. ‘But these voters are expecting a lot from American business: they prioritize keeping jobs here in the US as highly as creating new jobs.

‘At the same time, these voters are somewhat skeptical business leaders will be able to live up to that expectation without help from the new administration: by a four-to-one margin, swing state Trump voters trust Trump more than corporate CEOs to meet the needs of American businesses and American workers.’

One industry that may well benefit from the election result is the rail sector. Maeghan Albiston, assistant vice president of IR at Canadian Pacific Railway, points to a potentially positive impact for rail companies given Trump’s promised increase in infrastructure investments.

‘While it’s too early to say with any certainty how various policies will ultimately unfold, from a railroad perspective, increased infrastructure spending and other fiscal stimulus could be potential positives for the US economy and rail shipments,’ she says. ‘This is because most significant infrastructure projects require inbound raw materials – such as steel, cement and other aggregates – all of which efficiently move across North America by rail.’ 

The telecoms industry could also see a number of positive impacts, says Nils Paellmann, vice president and head of IR at T-Mobile. ‘There are a couple of issues that could be favorable to our industry under a Trump administration,’ he explains. ‘The first is corporate tax reform, with a projected lowering of the corporate tax rates and the potential to write down investments immediately or sooner than currently allowed.

‘There’s also been a lot of M&A speculation, with the expectation that M&A transactions could have a higher chance of regulatory approval under a Trump administration, as well as the potential reversal of certain aspects of net neutrality, which could be an advantage for telecoms.

‘On the negative side, talk of border adjustment may mean higher taxes on imports. All in all, it’s a bit too early to tell exactly what the impact will be, especially as there are still some key appointments outstanding.’ 

And it is this ‘fear of the unknown’ that is having the biggest impact on the current investor landscape, says Zivin, highlighted by the results of a recent Brunswick survey among professional investors. 

‘We find that uncertainty in the policy and regulatory environment with the incoming administration will be shaping investment behavior,’ Zivin says. ‘This is particularly true in the highly regulated industries of healthcare, energy and financial services, where the policy and regulatory environment is a top consideration in driving investment decisions. For these areas, the proof will be in the pudding when Trump’s administration is in place.’

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