Trump Victory Boosts Capital Markets Recovery

Investing.com — The decisive Donald Trump victory is set to add fuel to the capital markets recovery, Wells Fargo (NYSE:WFC) said Thursday, expecting a less regulatory burden on transactions to help boost mergers and acquisition as well as private equity activity.

Market Outlook
"Trump victory likely adds extra fuel to the capital markets recovery fire. We expect less regulatory scrutiny on transactions," Wells Fargo said in a recent note. They expect large caps to benefit as well as bank M&A and a greater level of activity from private equity (PE).

The bank anticipates that the market will price in part of its upside scenario, benefiting alternative asset managers, M&A independent advisors, wealth managers, and traditional managers in that order of preference.

A stronger capital markets backdrop is considered positive for performance fees and capital markets revenues, which would likely give a boost to alternative asset managers like Carlyle Group Inc (NASDAQ:CG), KKR & Co LP (NYSE:KKR), and TPG (NASDAQ:TPG).

Wells Fargo also highlighted Evercore Partners Inc (NYSE:EVR) and Stifel Financial Corporation (NYSE:SF) as potential winners among its key tactical picks amid less regulatory scrutiny.

However, not all firms are expected to benefit equally.
Lazard Ltd (NYSE:LAZ) could lag on a relative basis, Wells Fargo noted, as tariffs introduce uncertainty to cross-border M&A. Additionally, a stronger dollar poses a headwind to international strategies.

While the overall outlook is positive, Wells Fargo cautioned that an ongoing market rally "could weigh on organic growth and pressure already low cash levels as investors stay nearly fully invested."

The bank added that the shifting interest rate curve also introduces some uncertainty.