During former President Donald Trump’s first term in office from 2017 to 2020, the information technology (IT), economically-related consumer goods, utilities, and healthcare sectors were found to have high returns. The traditional energy sector was found to have actually seen its stock prices decline due to low interest rates and the boom in eco-friendly energy driven by ESG (environment, society, and governance).

According to Hanwha Investment & Securities on the 25th, the sector-wise returns during Trump’s first term were IT (125.5%), consumer discretionary (79%), utilities (73.7%), and healthcare (54.8%). It is interpreted that the returns were high for sectors related to consumer discretionary, such as automobiles, travel, and shopping, as the growth of big tech led to an increase in IT stock prices and the economy was booming.

What overturns conventional wisdom is that the energy sector return was extremely low at -54% during the first four years of Trump's term. At that time, the ESG craze was sweeping the world and the perception that eco-friendly energy was the trend was widespread. In addition, the analysis is that the eco-friendly energy industry, which requires large-scale investment, was able to take off because it was a low-interest-rate era where interest rates had not yet been raised in earnest. This is why there are observations that eco-friendly energy could gain momentum again depending on the degree of interest rate cuts even if former President Trump is re-elected.

During the Biden administration, when war and high prices continued, the energy sector actually performed well. It rose 106.3% from 2021 to August 6 of this year. This is because the demand for cheap fuels such as oil and coal increased due to rising energy prices, but the supply decreased due to the fossil fuel exclusion policy.

Park Se-yeon, a researcher at Hanwha Investment & Securities, said, “The capital-intensive eco-friendly energy industry is more affected by interest rates than by policies,” adding, “Even if former President Trump is reelected, if interest rates are lowered, a favorable environment for eco-friendly energy companies could be created.”

However, there are many observations that Trump's second term will be different from Trump's first term. Unlike his first term, when he was in power but was a non-mainstream figure, it is expected that former President Trump, who has control of the Republican Party and has experience, will push forward policies strongly.

“If former President Trump is re-elected, I don’t think we can easily predict the ripple effects of his policies,” said an asset management company representative. “Even without going through legal revisions, he could put in a strong drive through executive orders.”

Reporter Park Han-shin