Trump's Victory Shifts Big Money: Winners and Losers
1min read In the wake of Donald Trump's U.S. presidential election victory, hedge funds have been rapidly acquiring bank stocks while betting against renewable energy companies. This trend marks the fastest shift in three years.
Financial stocks, particularly banks and trading firms, emerged as the top choices for large-scale investors last week. Although it wasn't specified which regions attracted the most attention, a note indicated that U.S. banks stood to benefit significantly.
Investors are optimistic that financial stocks will gain from anticipated regulatory easing and possible tax reforms under Trump's administration. This expectation has fueled increased interest in the financial sector, despite historically low positioning by hedge funds.
Following Trump's win, U.S. bank stocks surged over 10% on November 6 from the previous day's close. Prime brokerage desks, which facilitate trades for hedge funds, reported this uptick in activity.
The focus wasn't solely on U.S. stocks; hedge funds also shifted toward equities in developing Asian markets and transitioned from short to long positions in Europe. While they increased long bets on financial services and consumer finance companies, they withdrew from utilities, particularly renewable energy producers.
Renewable electricity companies faced the brunt of this strategic shift, with hedge funds adopting a strong short stance against U.S. utilities, showing two short bets for every long position.
The landscape indicates a clear preference for traditional financial sectors, highlighting a significant repositioning in response to anticipated policy changes.
