(Bloomberg) — After watching wind and solar stocks tumble in the hours after Donald Trump’s election victory, asset managers are focusing on a corner of the green transition that they say will undermine the president-elect’s anti-ESG agenda. will defy: the electricity grid.
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A day after the election, TD Securities analysts told clients that networks and the equipment needed to build them now represent one of “the best-positioned subsectors of the energy transition.”
It’s a call that’s already paying off. Since the Nov. 5 election, a key gauge for the equipment used in energy networks has risen about 6% in the stock market, while the broader S&P Global Clean Energy Index has lost roughly a tenth of its value. Suppliers in Asia and Europe that derive a significant portion of their sales from the US market have also recovered, with Japan’s Hitachi Ltd. saw an increase of more than 8% in the same period.
Money managers say investing in U.S. power and electricity grids is a way to avoid the impact of tariffs that will hurt other sectors. And with Trump’s protectionist policies suggesting that more production will be forced back to the US, US energy demand is set to soar, boosting investment opportunities.
“We are very bullish on energy demand in the US,” said Ran Zhou, portfolio manager at New York-based hedge fund Electron Capital Partners LLC. “And related to that is carbon-free energy in the long term.”
Companies developing networking equipment that have seen their stock prices rise since the Nov. 5 election include Eaton Corp., Rockwell Automation Inc. and Ametek Inc., all of which are up more than 6%. Emerson Electric Co. has added more than 7%.
Companies connected to electricity grids were already outperforming other parts of the green sector well before the US election, with the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index rising 20% last year. But a larger U.S.-based manufacturing sector, driven by Trump’s tariffs, appears to be driving a new wave of growth for U.S. grid stocks, according to asset managers interviewed by Bloomberg.
Trump has made clear he wants to repeal unspent funds from the Biden administration’s signature climate bill, the 2022 Inflation Reduction Act. And his pro-fossil fuel stance has led to panic among green investors that a Trump White House will hinder the development of sustainable energy projects in the US.
