The re-election of President Barack Obama will have a big impact on the healthcare and financial services sectors of the U.S economy, said experts from BMO Financial Group during a market call Wednesday.
The implementation of Obama’s healthcare legislation – known as “Obamacare” – is good news for companies in that sector, said Andrew Busch, global currency and public policy strategist, BMO Capital Markets in Chicago, during the call. “Insurance companies, hospitals and generic pharma are Obamacare winners,” he said, “that [legislation] will continue to be implemented, that will be good for them.”
The news for the financial services under an Obama administration isn’t so rosy. Jack Ablin, chief investment officer, BMO Private Bank in Chicago, said the continued implementation of Dodd-Frank and the almost certain enforcement of the Volcker rule (which would restrict speculative investments by financial companies) will affect the sector negatively. As well, Obama’s intention to increase the dividend tax rate is more bad news for the financial sector, he said, because companies in this area tend to have higher than average dividend yields.
One of the sectors that will be least impacted by an Obama administration is technology, said Ablin. “Technology, generally, is a very lightly regulated sector anyway,” he said. “It’s a growth sector so that investors are generally looking for longer term capital gains rather than relying on dividends.” The one downside for the sector is that technology companies currently have a favourable tax rate due to offshore subsidiaries and international trade, said Ablin. That tax rate may change if the Obama administration pursues its interest in taxing foreign profit. “President Obama is on record in desiring a foreign profit tax,” he said. “So, to the extent that that comes into law, it could impact some of the largest [tech] players.”
In Canada, the re-election of Obama means a possible missed opportunity in the energy sector. Mitt Romney’s pledge for North American energy independence would have had a significant impact on Canadian oil patch companies, said Paul Taylor, chief investment officer, fundamental equities, BMO Asset Management Inc. in Toronto. However, U.S interest is no longer quite as certain. “If the nod had gone to the Republicans,” said Taylor, “[we] would have put a bid on some Canadian oil patch stocks this morning.”