Streaming service Netflix scored a huge success in 2013 with its “House of Cards” series. Over six seasons, the first original of the current industry giant gave a detailed insight into the power struggles, intrigues and scandals of US politics. Although the series may since have been discontinued, just now Washington D.C. is supplying the perfect script for a reboot. Since the first TV duel between President Joe Biden and his predecessor, Donald Trump, events in the election campaign have come thick and fast. Biden cut such a weak figure on CNN that doubts about his chances of victory grew ever greater. The 81-year-old has now pulled out of the race and endorsed Vice-President Kamala Harris as candidate. One week before, Donald Trump was injured at a campaign event. The bloodstained face and clenched fist of the 78-year-old ensured iconic images.
The election campaign is not, of course, leaving the stock market cold. On Wall Street, the search is on for shares that will profit most from the future pecking order in US politics. While Donald Trump continues to be considered the favourite, the race from the White House is still far from over. With that in mind, Leonteq has issued bonus certificates that enable a partially protected position to be taken on both sides. The calculation that there will be another Democratic president can thus be pursued just as much as the expectation of a change of power. Each product is based on four shares that are regarded as beneficiaries of the respective political camp. They are also partially protected: as long as no underlying is trading at or below the barrier of 70% of the initial level by the end of the term, the certificates will be repaid at the bonus level at least. Should prices go up, the investor participates in the increase, which in this case is determined by the equally weighted basket containing the underlyings. No provision has been made for a cap.
The “Democrats” bonus certificate takes account of the priorities on the agenda of the current US president. There is likely to be little change in the core issues even under a new candidate: alongside a liberal attitude to the technology sector (Alphabet), these include health (Pfizer), e-mobility (Tesla) and climate protection (Enphase Energy). As a manufacturer of inverters, Enphase Energy sits at an interface of the energy transition. The company has delivered 68 million devices since it was founded in 2006. Spurred by Biden’s extensive support for the solar sector, Enphase hit an all-time high at the end of 2022. The share has undergone a significant correction from that level, with overcapacities, falling prices and, more recently, the possible defeat of the Democrats putting the brakes on the share price. Tesla, meanwhile has gone up: the company was able to score points with higher than expected vehicle deliveries. In addition, Tesla sold more battery systems in the second three months of 2024 than it had ever done in any previous quarter. While Alphabet is soaring as an internet behemoth, cloud giant and AI beneficiary, Pfizer has recently had a rather hard time on Wall Street. The improvement in medical provision resulting from a Democrat-led government could play into the hands of the pharmaceuticals group.
Alcoa, Morgan Stanley, Halliburton and EOG Resources are the underlyings for the “Trump” bonus certificate. True to the “America First!” motto, this selection reflects the Republicans’ desire to strengthen infrastructure and focus on fossil fuels for their energy supply. Aluminium producer Alcoa is just as likely to see a boom in business in the event of a change of power as Halliburton, the oil and gas specialist, and EOG. A Trump return to the White House is likely to be followed by tax cuts and a wave of deregulation in the US financial sector. With that in mind, it is only logical that the big bank Morgan Stanley is one of the underlyings of this bonus certificate. When Donald Trump was elected president in November 2016, this financial stock appreciated by more than half within the space of 12 months. The broad S&P 500 Index advanced by around 25% over the same period. Of course, a retrospective view is no guarantee of future performance. The bonus certificate makes all the more sense, then. Nevertheless, there are limits: if a share is trading at or below the barrier at the end of the term, the partial protection lapses. Repayment of the product, which is available in CHF or USD, is then determined by the weakest underlying.
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