US Elections: Fund positioning and outlook Trecento Santé
This is a special day and a surprise to many investors. The candidate Trump, given loser until last night, won the American presidency. This morning at the opening of European markets, only the health sector was up. At the opening of the American market this afternoon, the stock market prices of pharmaceutical laboratories and biotechnology companies are experiencing a significant surge.
As we mentioned in our quarterly letter last week, these elections are a strong catalyst for the health sector. In this respect, we expect a marked upgrade.
Indeed, the negative momentum that has seen the health since the launch of the American electoral campaign has disappeared with the defeat of Hillary Clinton.
Unlike Hillary Clinton’s program, Donald Trump’s program does not put pressure on drug prices and Obamacare’s proposed reform will liberalize the pricing system.
In addition, the new President of the United States wants to introduce a new fiscal policy with a reduction of the corporate tax (from 35% to 15%), the maintenance of tax credits for research and development and above all authorize the repatriation of cash that US companies hold abroad for a fixed tax rate of only 10%. Companies in health care are very largely endowed with cash abroad. As a result, we are likely to see an increase in share buyback programs, dividend payments and mergers and acquisitions in the United States.
Last but not least, the congress became mainly Republican, a party particularly inclined to defend the interests of the pharmaceutical industry.
In line with our investment strategy for a significant performance coupled with lower volatility than our competitors, we adopted a measured approach over the past few weeks, given the binary nature of the election.
The sub-sector mix we set up this year has allowed us to have a leading position in terms of performance in the global health fund ranking.
Last night, 70.95% of our equity investments were in the US market. Our healthcare fund is well positioned to benefit from the sector’s return to grace.
The whole team remains at your disposal for any clarifications.
The management team of Trecento AM.