Investing Opportunities in Tech depending on winning candidate
Introduction
2024 so far has been a pretty one way street especially when looking at both the S&P500 and by extension the NASDAQ 100. I say this because the S&P500 has been getting increasingly concentrated in tech related stocks. And speaking of tech, the U.S. Tech sector remains a dominant force in the global economy in 2024, continuing its trajectory of innovation and growth despite navigating economic and regulatory challenges. Let's explore what are the avenues that investors can take in order to capture meaningful returns in light of the US presidential election and increasing scrutiny on regulatory frameworks as it pertains to an increasing interest in national security.
Since October 2022, S&P500 has been rallying and achieving all-time highs. The tech industry has been carrying the economy, and just the Magnificient Seven companies alone, are worth a combined $15.98 trillion as of August 2024. They make up 32.5% of the S&P500's total market cap of $49.13 trillion. While the tech industry may continue to outperform the market, the pace and performance of the sector depends on the 47th president of the United States, to be elected in coming November. With our 2 strong candidates, Trump and Harris, and their contrasting opinions and policies, investors could look towards different sectors and stocks to invest in.
Trump Presidency
In the event that ex-President Donald Trump wins a 2nd term, we can expect Trump to take on a 'protectionist' approach. Since his 1st term, Trump has advocated strongly for tax cuts and tariffs on other countries to spur economic growth of the US economy and “make America great again". His presidency would benefit the big corporations and private corporations in the tech sector, and lighter regulations on the Artificial Intelligence (AI) sector.
Private Corporations and Semiconductor Sector
In his efforts to reduce inflation, Trump aims to extend the 2017 tax cuts he implemented and further reduce corporate tax from 21% to 15%. This will especially benefit the Magnificient 7 corporations, like $NVIDIA (NVDA.US)$ , $Alphabet-A (GOOGL.US)$ , $Meta Platforms (META.US)$ and $Apple (AAPL.US)$ which would be able to enjoy reduced taxes and higher profits. Should Trump be able to go ahead with his tariff implementations of at least 10% on all imports from other countries and another tariff upward of 60% on all Chinese imports, these companies will face reduced external competition, and ideally, room for further innovation and devleopment to lead to new advancements in technology.
AI Sector
Trump reportedly supports lighter regulations and takes on a hands-off approach towards AI. He has promised to repeal Joe Biden's nonexecutive order that limits AI innovation and development. As part of Trump's blueprint for potential second term, Project 25 outlines proposals to develop AI research and innovation while limiting China's access to these technology. His running mate, Vance, who comes from a venture capitalist background, has also voiced his opinion of opposing AI regulations as well. With the little regulations imposed on AI, the AI sector is given the environment to advance and test the limits of AI. Venture capitalists are more inclined to invest in AI startups and projects if there are fewer regulatory hurdles and encourage growth of new AI. What more, with famous AI firm, OpenAI, now considering going public, a Trump presidency would definitely help boost investment in this sector.
Harris Presidency
Harris, the current Vice President of the US, goes big on climate change and abortion rights. Economists believe that under a Harris' presidency, the clean energy, electric tech and health tech sectors would benefit from government funding and interest in these sectors. Kamala Harris has been a strong advocate for clean energy and technological innovation, emphasizing the importance of transitioning to renewable energy sources and harnessing technology to combat climate change. She has been supportive of initiatives that aim to promote green energy solutions like solar and wind power, and accelerate the adoption of electric vehicles (EVs).
By championing clean energy and tech, Harris aims to position the U.S. as a global leader in addressing climate change while fostering economic growth through sustainable innovation.
Clean Energy Tech & Electric Tech
A Harris presidency meant that we could see a stronger commitment to climate and environmental issues and an increased funding towards the clean energy and electric tech sector. Harris was a sponsor of the Green New Deal, which called for the US to move into 100% clean energy within the decade. She has also played a crucial role in the passing of the 2022 Inflation Reduction Act, the largest climate investment in history. Although Harris has yet to propose her plan for climate change, she has been a supporter of clean energy and electric vehicles, in efforts to decarbonise the industry.Aligning with her interests, her presidency would see an increase in government funding and support in the clean energy and electric tech industry. Some notable names that would stand to gain from Harris' push into a more ESG framework will most likely be $NextEra Energy (NEE.US)$ , $Enphase Energy (ENPH.US)$ and $Tesla (TSLA.US)$ .
Health Tech
Additionally, Harris who is a strong proponent of women and their body rights, and has pledged to restore the protections of Roe v. Wade across all states. Walz has also been a strong advocate of healthcare and pro-choice, and supports policies in the healthcare sector that benefits lower income individuals. In line with her presidential debate promise, Harris intends to extend healthcare benefits and lower cost of living among middle and lower income families. And one of the policies she will be pushing would be to place a cap on price of insulin payments and prescription drugs, increase subsidies for insurance. Her presidency would see more emphasis and focus on the healthcare industry, and increased funding towards this sector. $UnitedHealth (UNH.US)$ and $Teladoc Health (TDOC.US)$ , which are aligned with providing for the masses and reaching out in rural areas would also stand to gain from such subsidies.
Conclusion
From the quick take above, regardless of whether voters see a Trump or Harris win, investors on both sides of the fence can finally agree upon one thing. Both candidates are actually pro-tech sector and agree (albeit unintentionally) that tech is the way forward and it is also a sector of key national security and interest. As such, the tech sector is poised to remain the biggest winner.Both administrations would face the reality of an increasingly digital and technologically driven global economy, where innovation in areas such as artificial intelligence, cybersecurity, clean energy, and healthcare technology continues to accelerate.
How Do Investors Get on the Bandwagon?
How can investors take advantage of this growth that is just on the horizon for the tech sector? Of course, if one is experienced, they would be able to individually pick the stocks . However, for the busy individual who wants to invest in the broad sector with minimal management, he/she should definitely consider allocating some capital to the $E-mini NASDAQ 100 Futures(MAR5) (NQmain.US)$ .
The Emini NASDAQ 100 futures is based on the NASDAQ 100 Index, which tracks 100 of the largest non-financial companies listed on the NASDAQ exchange, primarily from the technology sector. This is a good way for investors to gain exposure to the tech sector without any form of active management.
Alternatively, if investors find that the capital required for the Emini NASDAQ 100 futures is too much, they can consider the Emicro stock indices futures. These are smaller-sized contracts that track major U.S. stock indices, including the NASDAQ-100 and S&P 500, making them accessible to retail traders and those with smaller portfolios. Do note that all financial instruments come with their own related risks and investors should still definitely do their own due diligence.
More details can be found here:
Prepared by:
Moomoo Singapore
Isaac Lim CMT, CFTe
Chief Market Strategist
Chief Market Strategist
This report is provided for informational and general circulation purposes only and should not be construed as an offer, solicitation, or recommendation for the purchase or sale of securities, futures, or other investment products. It does not take into consideration any particular needs of any person. This advertisement has not been reviewed by the Monetary Authority of Singapore.
For full disclaimers, please visit https://www.moomoo.com/sg/support/topic5_935.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Cui Nyonya Kueh :
Ultratech : trump lashes out at big tech. not good for investors
Ah Kwang : ^chill mate, it's just an opinion.
102514703 : Trump is very emotional.
Ultratech Ah Kwang : ya that was me being chill trust me. want me to go into more detail about trumps lying
Ah Kwang : thanks for the kind offer, unfortunately I'm not interested in political shenanigans. Harris, Trump. doesn't really matter. as long as we're prepared for the post election market.
Trader’s Edge OP : I think at the end of the day, no matter where our political inclinations lie (no pun intended), as investors we are out to make money. Who’s right or wrong, I personally feel it isn’t our position to judge. So let’s keep the discussions to profit making opportunities and market views. I’m always open to differing market views.. It’s what makes our markets interesting! Keep the discussion flowing everyone! :) - Isaac Lim