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As Joe Biden prepares to transition into the White House, we list the ways his policies could potentially affect the stock market according to industry.

Technology

  • For four years, the Trump administration has accused social media companies of being biased against it.  While this will ease under Biden, companies like Facebook are still expected to face scrutiny for antitrust and privacy violations.
  • Biden’s administration is likely to continue previous efforts to break the monopoly held by tech giants like Amazon and Facebook.
  • However, business factors have a more significant influence on stock prices in the immediate future (e.g. Apple’s launch of their iPhone 12 range).

Semiconductor

  • This industry is a key piece in the ongoing US-China trade war.
  • While there are no signs of the trade war ending under Biden, he is expected to take a softer stance than Trump.  
  • There is a possibility of Biden easing restrictions Trump had placed on supplying chips to Chinse companies. This move will benefit American chipmakers and semiconductor equipment makers.
  • However, issues with piracy and intellectual property (IP) protection are likely to persist.

Energy

  • The incoming president has been very vocal about addressing climate change.  
  • The renewable energy industry is expected to gain a huge boon from this.
  • Traditional, non-renewable energy industries such as oil and gas (O&G) and coal mining are expected to take a hit.

Healthcare

  • Among Biden’s policies are to control drug prices and to introduce a public health insurance option called Medicare.
  • This will be bad news for pharmaceutical stocks, but stocks of insurance companies that offer Medicare are likely to increase.
  • That policy will only take effect once approved by the Senate, which is unlikely if the opposing party (Republicans) form the majority.

Restaurants & retail

  • Biden plans to more than double the minimum wage from $7.25 to $15 an hour.
  • This will eat further into the profits of companies in the F&B and retail industries, already battered by Covid-19 lockdowns.
  • Especially affected will be those with a large number of employees, such as Walmart.
  • This could lead to increased prices, fewer workers hired and increased automation.

General

  • Leading up to the election, Biden has demonstrated to have taken Covid-19 more seriously than Trump. His plan, which includes potential stimulus aid and a vaccine has so far boosted investor confidence.
  • Biden has pledged to increase taxes on corporations, which will hurt profitability. A rapid implementation of this will reduce stock valuation. Conversely, a gradual increase will have a less adverse effect on the market.

Disclaimer: All companies named here are for informational purposes only and are not a recommendation to buy or sell on the stock market.

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