Australian Stock Winners and Losers in U.S. Vote: Election Guide

(Bloomberg) -- Australian gold miners and health firms are among stocks that investors will be watching closely ahead of the U.S. election next week.

The contest between Republican President Donald Trump and Democrat nominee Joe Biden on Nov. 3. will impact investment style preferences, Australian commodities producers and coronavirus vaccine manufacturers. A potential shift in congressional leadership could also affect Australian shares.

Biden is leading Trump by 8 points, according to the RealClearPolitics average of national surveys. Australia’s benchmark stock index has averaged a 3.4% move in the week following the past five U.S. elections, according to data compiled by Bloomberg.

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Here’s what to watch ahead of the vote:

Value vs Growth

If Democrats take the White House and the Senate, expect a substantial amount of stimulus to support cyclical and value stocks, said Randal Jenneke, head of Australian equities at T. Rowe Price. Growth shares tied to economic improvement would also perform well in a so-called blue wave.

However, a divided government under Trump or Biden will result in less stimulus. Health stocks and growth shares would outperform in this scenario, Jenneke said. Growth equities have surged through 2020 as record low global interest rates spur investment.

Key stocks: James Hardie Industries Plc (+28% YTD), Domain Holdings Australia Ltd. (+11%), Seek Ltd. (+3.2%), CSL Ltd. (+7.3%)

Materials

Biden‘s $2 trillion clean energy plan may increase demand for solar panels and electric vehicles, according to Bloomberg Intelligence analyst Michelle Leung. Copper, nickel and silver miners could benefit from higher production of such energy sources.

The flood of stimulus expected in the wake of a Democratic sweep would fuel gold prices, boosting miners. A contested election between Trump and Biden could also send prices for the metal soaring.

Key stocks: BHP Group Ltd. (-8.2% YTD), Newcrest Mining Ltd. (+0.9%), OZ Minerals Ltd. (+51%), Western Areas Ltd. (-21%), Northern Star Resources Ltd. (+38%), Evolution Mining Ltd. (+48%), Saracen Mineral Holdings Ltd. (+76%)

Health

Trump hasn’t announced new strategies to fight the coronavirus pandemic, “which increasingly means that the focus of the current administration will be on the progression of a Covid-19 vaccine” and manufacturers like CSL, Jefferies analysts led by David Stanton wrote in a note last month.

Meanwhile, Biden’s plans to invest in virus testing could bode well for diagnostics firms. He’s also called for more comprehensive public health insurance options and drug-pricing regulations, which could have implications for U.S.-exposed health firms, Jefferies added.

Key stocks: Sonic Healthcare Ltd. (+26% YTD), Healius Ltd. (+28%), CSL

Energy

The election is a lose-lose for coal miners. Biden’s push for clean energy is a disadvantage for the sector, while a Trump victory might see more supply from the U.S. onto the seaborne market, Bloomberg Intelligence analyst Daniel Kang said.

The Australian coal industry is already under pressure as China suspended purchases of the nation’s product, a decision that further soured political tensions between the world’s biggest consumer of commodities and its top supplier.

Key stocks: Whitehaven Coal Ltd. (-62% YTD), New Hope Corp. (-46%), Yancoal Australia Ltd. (-31%)

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