US election: Which ASX stocks benefit from a Trump victory?

Albeit with a healthy dash of imagination, it’s possible to forecast ASX winners and losers under a Trump regime.

Trump is big on infrastructure — so long as the projects are built by Americans. Picture: AP.

Forget the nags for another year.

On Wednesday afternoon, the results will trickle in on a race with a little more gravitas: the US presidential election.

While commentary understandably has centred on the broad economic implications of a Trump victory, it’s possible to pick some likely ASX winners and losers — albeit with generous imagination and extrapolation.

The likely outcome, of course is a no-change scenario of a Hillary Clinton-led Democrat administration, staunched by a Republican-controlled House of Representatives (and possibly Senate as well).

As of Tuesday evening a Trump victory odds offered $3.50, narrower than that offered on Cup winner Almandin in a two, rather than 24, horse race. The Brexit ‘yes’ vote, as has been duly noted, was at longer odds.

We’ll start with the prickliest topics: defence and national security.

While Hillary isn’t exactly planning to disarm the joint, Donald’s robust policies such as bombing ISIS-held oilfields call for more hardware.

Trump’s priorities are to boost the US air force to 1200 aircraft and to expand the ebbing navy’s complement to 350 vessels.

He’s also cited an emphasis on cyber warfare.

Stocks worthy of mention are Quickstep Holdings (QHL, 11c), which builds carbon composite components for the US-led Joint Strike Fighter (JSF) program at its Bankstown base.

While the $400 billion (and counting) program has been widely maligned, Donald’s probably stuck with it.

Based at its Alabama shipyard, Austal (ASB, $1.52) is prime contractor for the $US4bn Littoral Combat Ship program (initially eleven vessels) and the two-ship, $US400m Expeditionary Fast Transport Vessel program.

Alexium International (AJX, 65c) is a preferred US Department of Defence partner for its flame-resistant technology that doesn’t contain bromides, which are being banned in the US and elsewhere.

On the cyber side, drones will be integral to future battles.

Step forward Department 13 (D13), which recently presented its Mesmer drone surveillance system to Black Dart, the US military’s leading counter-drone exercise.

Drone distributor Xtek (XTE) has its fingers in a number of hi-tech pies and hopes to supply its lightweight carbon composite inserts to the US military.

In a similar vein, Electro Optic Systems (EOS, $1.16) supplies hi-tech gun turrets to the US. But arguably its greater potential lies with its technology to track space debris, a program that has attracted the support of military contractor Lockheed Martin.

Mexican walls aside, Trump is big on infrastructure — so long as the projects are built by Americans.

Eden Energy (EDE, 22c) will be heartened that Trump mentions the country’s 60,000 “structurally deficient” bridges.

Eden’s carbon-based concrete strengthening additive is being trialled by the Georgia Department of Transportation, with commercial interest from several other bodies.

Donald also promises the new assets will be built by “American steel made by American workers”. We trust that includes BlueScope’s US operations, based on the acquired Butler Manufacturing.

Poet laureate Bob Dylan may be still warbling away but his lament that America soil was being controlled by Arab oil is now outdated.

Trump wants to keep it that way, promising to “unleash $US50 trillion in untapped shale oil and natural gas reserves”.

Is that quaking from Islamic State, or from BHP Billiton’s petroleum HQ in Houston as the oil price recovery unfurls?

Health? Both candidates are for it. But Trump wants to replace Obamacare — the closest the US gets to a universal health scheme — with a “patient centred healthcare system that promotes choice, quality and affordability.’’

Admittedly, things are more opaque here than Hillary’s email protocols. But the prospect of a winding back of health reimbursements are potential negatives for the likes of Aussie leaders ResMed, Cochlear and CSL (which yesterday lost its $100 hero stock mantle for different reasons).

On the flip side, Trump wants to liberalise foreign drug imports.

On the other side of the wall, the Mexican peso has been rising and falling in converse proportions to Trump’s poll results.

Our biggest ASX exposure to Mexico was when Sol Trujillo ran Telstra.

But Carsales.com last year bought a 65 per cent of SoloAutos, Mexico’s biggest car classifieds site for around $10m. Also, car classifieds mini me LatAm (LAA) derives one-quarter of its revenues from Mexico.

In partnership with Rio Tinto, Azure Minerals (AZS) is chasing silver in Mexico.

Criterion singles out Alexium, which has secured contracts in non-military sectors including the mattress industry, as a speculative buy.

EOS may be one for the boffins but it is revenue generative with a healthy cash balance of $8.5m.

Eden shares have more than doubled in the last six months, but investors await news of more concrete contracts rather than test programs.

Quickstep and Austal also rate as spec buys stocks that should thrive, no matter who wins the keys to the White House (and that ominous briefcase).

The Australian accepts no responsibility for stock recommendations. Readers should contact a licensed financial adviser. The author owns LatAm Autos shares.