By Nigel Green

With the US Presidential 2024 election campaign intensifying, and Vice President Kamala Harris maintaining a slim lead over former President Donald Trump in the polls, global investors are taking steps now to face the potential market turbulence ahead.

According to the latest Morning Consult survey, Harris holds a narrow but significant lead, with 47% of voters supporting her compared to Trump’s 44%. This marks the fourth consecutive week that Harris has maintained an advantage, signalling a potential shift in the political landscape that could have profound implications for the US economy and international markets.

The political landscape is set to shift dramatically, and this could have significant implications for various sectors of the economy, demanding careful portfolio adjustments.

Under a Harris White House, we expect that protectionism would likely take on a more targeted form, focusing on specific areas where US industries face unfair competition.

This could mean maintaining some of the tariffs and trade barriers imposed by Trump, particularly those aimed at China, but with a more strategic application.

Instead of across-the-board tariffs, Harris might focus on areas like intellectual property protection, technology transfer practices, and environmental standards. For global investors, this means that while the overall trade environment might stabilize, certain sectors could still face challenges.

For instance, industries heavily reliant on Chinese imports or with significant exposure to the Chinese market might continue to experience pressure under Harris.

While she is likely to restore more traditional trade relationships with European and other Asian partners, her administration would probably keep a watchful eye on China, enforcing strict measures where US interests are at stake.

Investors with significant exposure to companies dependent on Chinese manufacturing or exports may need to reassess their risk profiles, considering potential supply chain disruptions or cost increases that could arise from targeted trade policies.

On the flipside, Harris’s likely emphasis on strengthening alliances and re-entering multilateral trade agreements could benefit sectors that have been destabilized by Trump’s more isolationist policies.

The potential re-engagement with agreements like the Trans-Pacific Partnership (now the CPTPP) could open new markets and reduce trade barriers for American industries, creating a more predictable and growth-oriented environment.

This would be particularly advantageous for sectors like tech, manufacturing, and agriculture, which thrive on open and stable international markets.

Investors should also consider how Harris’s approach to protectionism might intersect with her broader economic priorities.

The energy sector, for instance, is poised to be one of the most affected areas depending on the election outcome.

Under a potential Harris administration, the push towards renewable energy is expected to gain considerable momentum.

Investors should consider increasing their exposure to companies involved in renewable energy production, energy storage, and electric vehicles. These industries are likely to benefit from federal support and policy incentives aimed at accelerating the transition to clean energy.

On the other hand, traditional fossil fuel companies could face increased regulatory pressure and a more challenging operating environment if Harris wins. This makes it a critical time to reassess your exposure to oil and gas sectors.

If you hold significant positions in these industries, it might be wise to consider reducing them, particularly if they have seen strong performance recently. The shift in policy focus could result in these sectors underperforming in the long term, and reallocating capital to more resilient areas could protect your portfolio.

The healthcare sector also warrants close scrutiny.

A Harris administration could prioritize expanding access to healthcare and increasing funding for health tech, telemedicine, and pharmaceutical research, meaning a potential boon for investors in these areas.

However, the potential for increased regulation, particularly around drug pricing and healthcare costs, could create headwinds for certain segments of the industry. Diversifying within the healthcare sector to include a mix of health services, technology, and more traditional healthcare firms could help mitigate risks while positioning you to benefit from growth opportunities.

Tax policy is another crucial factor that could change significantly with a Harris presidency.

The possibility of higher capital gains taxes and increased corporate taxes is very real, and these changes could weigh on corporate profits and overall market sentiment. Investors should consider strategies to manage these risks now.

For instance, tax-loss harvesting could help offset potential increases in capital gains taxes. Additionally, exploring tax-efficient investment options, such as municipal bonds or other tax-advantaged instruments, could provide a buffer against future tax hikes.

Safe-haven assets like US Treasuries and gold may also become increasingly attractive as election uncertainty peaks. These assets can provide stability in a volatile market environment, which is particularly valuable if the election results lead to a sharp market reaction.

Treasuries, despite their low yields, offer a counterbalance to equity risk, while gold, traditionally a hedge against both inflation and uncertainty, could serve as a protective element in your portfolio.

Building up a cash reserve ahead of the election is another strategic move worth considering.

Market turbulence often presents key buying opportunities, and having cash on hand allows you to take advantage of these moments without the need to liquidate other positions.

Instead of selling off large portions of your portfolio, you might gradually increase your cash allocation by trimming positions in sectors most vulnerable to political shifts or taking profits from overvalued assets.

As November approaches, the political landscape is poised to impact the financial markets in profound ways.

By making these strategic adjustments now – reallocating within sectors, considering tax implications, and maintaining a healthy cash reserve – you can safeguard your portfolio against potential risks and be prepared to capitalize on the opportunities that this election may present.

The key, of course, isn’t just to protect your assets, but to position them for growth in the post-election economy, regardless of the outcome.

(Author is deVere Group CEO and Founder)

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