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ETFs to Gain/Lose on Trump's Impeachment Talks

Sanghamitra Saha

A sudden effort has been noticed by Democrats in favor of impeachment of the U.S. President Donald Trump. Speaker Nancy Pelosi recently said that the U.S. House of Representatives will launch a formal impeachment inquiry into Trump.

The announcement followed reports that Trump may have used his powers wrongly and “sought help from a foreign government to undermine former Vice President Joe Biden, the current Democratic frontrunner, and help his own reelection.” With this, Donald Trump has become the “fourth U.S. president to face impeachment”.

Whatever be the case, the below-mentioned ETFs can top or flop if Trump gets impeached.

Likely Winners

China

Trump’s impeachment hints at the end of the trade war with China. It may resolve the ongoing trade tensions. Investors should note that a recent speech by Trump in the United Nations General Assembly urges nations to opt for nationalism and reject globalism. Trump also issued a message to China that he will not conform to any “bad deal” pertaining to trade negotiations. So, China ETFs like iShares China Large-Cap ETF FXI may be in a good spot at the moment.

Low-Volatility ETFs

Low-volatility ETFs like Franklin Liberty U.S. Low Volatility ETF FLLV, SPDR SSGA US Large Cap Low Volatility Index ETF LGLV and Invesco S&P 500 Low Volatility ETF SPLV should also prosper as Trump’s impeachment talks may keep the broader market edgy.

Semiconductor

Semiconductor stocks are highly sensible to trade tensions. Per Morgan Stanley equity strategists, “semiconductor and semiconductor equipment companies have the highest revenue exposure to China at 52%” and are thus exposed to maximum risks on rising trade tensions. Chipmaker Qualcomm (QCOM) has 65% revenue exposure to China and Nvidia’s NVDA sales exposure to China is 56%, per Goldman Sachs. So, VanEck Vectors Semiconductor ETF SMH may see gains (read: 6 Sector ETFs in Tight Spot on Renewed Trade Tensions).

Likely Losers

Defense

Trump is a proponent of boosting defense budget. Though any major fiscal tightening is improbable despite a divided government, defense-oriented stocks may lose if Trump’s impeachment talks continue. So, defense and aerospace ETFs like iShares US Aerospace & Defense ITA may come under pressure.

Infrastructure & Utilities

Trump is in favor of beefing up public spending by hundreds of billions of dollars on infrastructure. Thus, utilities equity ETFs like First Trust Utilities AlphaDEX Fund FXU or construction ETFs like Invesco Dynamic Building & Construction Portfolio ETF PKB may feel some threat.

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First Trust Utilities AlphaDEX Fund (FXU): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
iShares China Large-Cap ETF (FXI): ETF Research Reports
 
Invesco S&P 500 Low Volatility ETF (SPLV): ETF Research Reports
 
Invesco Dynamic Building & Construction ETF (PKB): ETF Research Reports
 
iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports
 
Franklin Liberty U.S. Low Volatility ETF (FLLV): ETF Research Reports
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
SPDR SSgA US Large Cap Low Volatility Index ETF (LGLV): ETF Research Reports
 
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