Now that the U.S. citizens have elected Republican Donald Trump as their president, the whole world is busy speculating and analyzing the impact of his economic plans on several asset classes. The initial shock resulted in a crash in market futures, though investors nerves soothed in the key trading session following Trump's conciliatory acceptance speech.
In fact, several corners of the ETF world saw bountiful gains and hit 52-week highs. But some corners of the investing world are likely to be hit hard. Below we highlight 5 ETFs and stocks that are in a high-risk zone now.
Trump is expected to take stricter steps on immigration and outsourcing – the both pillars that the tech sector stands on. Several technology companies like Apple (AAPL - Free Report) outsource their manufacturing activities to low-cost countries like China and Taiwan. Speculation is rife that 35% tax will be levied on products manufactured outside the U.S. Technology Select Sector SPDR ETF XLK will thus likely come under pressure and lost over 0.1% on November 9 (read: Tech ETFs to Watch Post Apple's Mixed Bag Q4).
The same logic is applicable for the automotive sector too. Companies like Ford Motors (F - Free Report) and General Motors (GM - Free Report) get their car production outsourced from Mexico. So, these companies may also bear the brunt of outsourcing. Moreover, Ford and General Motors normally enjoy huge U.S. government subsidies which they might lose in the outsourcing practice. In any case, U.S. auto sales declined for the third consecutive month in October. So, the underlying trend for the sector is definitely not upbeat. First Trust NASDAQ Global Auto ETF CARZ was down about 1.9% on November 9 (read: Auto ETFs to Watch on Dismal September Sales).
Trump’s win has by now become synonymous with Mexico’s loss. Mexico is a Trump-unfriendly investment due to his plans of building a wall along the border as part of his immigration strategy and making Mexico pay for it (read: 10 ETFs to Watch Today and After The Election).
Mexico peso slumped over 12% to a record low on cues of Trump’s victory and Mexico ETF iShares MSCI Mexico Capped EWW was down over 8.5% on November 9. Several Mexican stocks like Grupo Aeroportuario del Sureste, SAB de CV (ASR - Free Report) and CEMEX, S.A.B. de C.V. (CX - Free Report) are now in danger. ASR and CX were down 6.8% and 7.1% respectively on November 9.
Yet again, the overall emerging market bloc may fall prey to Trump’s international policies and trade plans. Already Trump has raised questions over the longevity of trade agreements with Mexico and Canada and has opposed the pan-Pacific trade deal. And since several emerging markets including China are low cost producers and known for outsourcing, migration of services and production back to America may weigh on emerging market growth.
Emerging market ETFs like iShares MSCI Emerging Markets (EEM - Free Report) (down over 3.2% on November 9), Asia ETFs like iShares Asia 50 AIA (down about 2.8%) or stocks like Kandi Technologies Group Inc. (down 12.4%), ZTO EXPRESS (CAYMAN) INC. ZTO (down about 7.3%) and AU Optronics Corp. (down over 6.1%)maythus feel the pinch.
With Trump pledging to boost fossil fuel, alternative energy ETFs like PowerShares WilderHill Clean Energy Portfolio ETF PBW, First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN and Guggenheim Solar ETF TAN will likely be hit hard. PBW, QCLN and TAN lost about 2.1%, 1.1% and 5.6%, respectively (read: 4 Frightful ETFs of This Year).
Solar stocks like Vivint Solar, Inc. (VSLR - Free Report) (down 6.3% on November 9), Yingli Green Energy Holding Co. Ltd. (down 5.3%) and JinkoSolar Holding Co. Ltd. (JKS - Free Report) (down over 8.4%) are at knifepoint now.
As Trump has already vowed to repeal ‘Obamacare’ and launch ‘Trumpcare ‘, beneficiaries of the Affordable Care Act like Hospital stocks may be under the gun. Hospital stock HCA Holdings, Inc. (HCA - Free Report) plunged about 10.8% on November 9.On the ETF front,healthcare providers fund iShares US Healthcare Providers IHF ormedical devices fundiShares US Medical Devices IHI lost about 1.5% and over 1.1%, respectively on November 9.
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