Morgan Stanley analyst Betsy Grasek said a Donald Trump presidency and a Republican-controlled Senate could boost big banks. Glassek believes that financial stocks rose more than 6% on Wednesday after Trump’s victory, which was the best day for the industry since November 2020. Financials were also the day’s best-performing sector, as expectations of a deregulatory push and more mergers and acquisitions under Trump boosted investor confidence in the sector. “The U.S. election suggests that a bull run in our coverage is more likely as a Republican administration brings a stable and relaxed regulatory framework,” Grasek wrote in a report Thursday, though the House races have not yet begun. , but House Republicans are optimistic they can maintain their slim majority. Grassek said that if they manage to retain control of the House of Representatives, Republicans will have a sweeping sweep of the executive and legislative branches, which “will further boost the level of activity.” The analyst highlighted four major banks that investors should keep an eye on: Citigroup, Goldman Sachs, Wells Fargo and Bank of America. Grasek has an outperform rating on all four stocks. She pointed out that the accelerated development of capital markets should benefit all the big banks, but Goldman Sachs will benefit the most. Bank of America is also expected to benefit from increased activity. Goldman Sachs is up more than 12% so far this week. Meanwhile, Citigroup is most vulnerable to rising excess capital levels because a Republican-led administration is unlikely to raise current capital requirements. Glassek noted that Citigroup has the ability to repurchase shares below its tangible book value per share. Citigroup shares rose 7% this week. In addition, Grasek said, “With Trump’s victory, our expectation is that the Fed will likely continue to implement the final proposal of Basel 3, which means that the current capital rules will remain unchanged.” She estimated that this will This has resulted in an $86 billion increase in excess capital currently held by the large banks covered by the firm. She said Wells Fargo, which rose 8% this week, would benefit from the removal of the asset cap.
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