Donald Trump’s US election win will likely prove a catalyst for generating new securities lending opportunities, according to experts at Brown Brothers Harriman. 

Analysts at the US bank have taken a closer look at what a Trump administration could mean for lenders and borrowers.

A strong dollar, relief for financial stocks and increased demand to borrow European securities are some of the anticipated trends.

“The GOP control of the White House and both chambers of Congress appears to provide Mr. Trump with the ability to advance conservative priorities on tax rates, fiscal policy and global trade,” BBH analysts wrote this week on the firm’s mindonthemarkets.com blog.

“We largely expect the core themes to prevail in the securities lending markets but also believe the result will likely be a significant catalyst for generating new trade ideas and producing new securities lending opportunities.”

Click here to read the BBH column in full

Financials

The expectation is that a Trump administration may scale back some of the more onerous regulations on the financial industry including parts of Dodd-Frank and the DOL Fiduciary rule.

Combined with rising interest rates, BBH reckons this would be a welcome relief for the sector and could have a positive effect on trading volumes as it would likely increase investors’ capacity to express their conviction if restraints are eased.

Healthcare

Healthcare insurers and hospitals will be among the sectors where a rise in borrowing demand would not be surprising, BBH experts reckon.

That’s down Trumps plans to repeal parts of the Affordable Healthcare Act and bring more competition to the industry.

Europe

The house view at BBH is that the impact of a Trump administration on Europe is harder to determine although coming on the heels of Brexit, attention is focused on whether the tide of nationalism will continue in the region.

"With Italy going to the polls in early December and French elections at the start of next year, there is little doubt that this will lead to increased volatility and will potentially increase demand to borrow securities as investors identify dislocation and market opportunities," BBH analysts wrote.

Asia

An acceleration in US growth rate could lead to a rise in interest rates and a subsequent selloff in Asian and emerging markets.

Specifically, there could be an uptick in lending demand for renewables and solar manufacturers following the removal of US subsidies.

Coal and steel producers could be a lending sector of interest, as it is likely the USadministration will impose tariffs on imported steel and coal.

Separately, clothing companies and manufacturers that source products in Asia will likely be hurt by a strengthening dollar because their contracts with suppliers are based in U.S. dollars.