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Donald Trump has emerged victor in the most keenly observed US election in history. A range of UK shares rallied once the result was clear, and so did those on the other side of the Atlantic, the S&P 500 hitting new record highs.
Markets hate nothing more than uncertainty. So a likely Republican ‘clean sweep’ of Washington has helped share markets rally.
Winning both the White House and Congress means Trump will face fewer obstacles in passing legislation, providing a stable outlook that has boosted investor confidence.
Looking beyond the near term, there are many UK shares I think could receive a profits boost from a Trump presidency. Here is one — along with an exchange-traded fund (ETF) — I believe could rise in value.
iShares MSCI USA Mid-Cap Equal Weight UCITS ETF
Trump made trade tariffs a signature of his last stint in office. And he’s vowed to slap more import costs on Chinese and European goods in the near future.
This could provide US businesses with a shot in the arm. As Hargreaves Lansdown analyst Victoria Hasler explains: “Trade tariffs favour domestic businesses over international conglomerates, and smaller companies are usually more domestically focused.”
She adds that “historically small companies have tended to perform well relative to their larger counterparts in a falling interest rate environment.”
A combination of Federal Reserve rate cuts and a Trump presidency could therefore boost conditions for local firms.
Investing in the iShares MSCI USA Mid-Cap Equal Weight UCITS ETF (LSE:IUSZ) could be worth serious consideration then. It has holdings in 332 different companies. And so I get exposure to shares with smaller capitalisations while at the same time spreading my risk.
The fund also diversifies my cash across multiple sectors to provide added strength. Major holdings here include tech business AppLovin, retailer Best Buy and biotech specialist Alnylam Pharmaceuticals.
I think the ETF’s average annual return of 11.9% since 2019 could pick up during Trump’s presidency. However, it could also be more vulnerable to any shocks to the US economy than other funds with multinational companies.
QinetiQ Group
Defence businesses like QinetiQ Group (LSE:QQ.) could also be big winners from a fresh Trump administration.
The President-elect made military spending one of his priorities on the campaign trail. He also continued to demand a rise in defence spending among the US’s international allies.
QinetiQ, which provides armed forces with engineering, cybersecurity and intelligence services among others, could receive a large sales boost in this landscape. It paid $590m in 2022 to acquire Avantus, a services supplier to the Department of Defense, to bolster its position Stateside.
Revenues are growing from the US and now account for 21% of the group total. And encouragingly, QinetiQ says that it has “a pipeline of significant opportunities.” These could rise sharply as the new global arms race heats up.
The FTSE 250 firm operates in a highly competitive industry. But in the current political landscape it could still deliver robust earnings growth.
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