Dani Saurymper, fund manager of the £533m AXA Framlington Health fund says the relief rally seen in pharmaceutical companies following the Trump vote might be short lived because of ongoing uncertainties on the Republican agenda on healthcare reforms.
Following last week’s US election results, the Stoxx Europe 600 index dropped 0.5 per cent on 9 November while iShares Nasdaq Biotechnology ETF gained nearly 9 percent on the day, with firms such as Pfizer and Mylan climbing 7 per cent and 4.8 per cent respectively.
The AXA Framlington Health fund has been highlighted by fund selectors as a potential winner of a Trump presidency. It is 71 per cent invested in North America and so may continue to benefit from Trump’s less interventionist approach on drug pricing.
Speaking to Fund Strategy, Saurymper says: “We had a relief rally from pharma and biotech firms following the worst scenario for the sector that would have been Hillary Clinton instead of Trump. But now this is starting to fade.”
Despite uncertainties in the markets surrounding the US vote, Saurymper underlines particular areas of healthcare that are likely to benefit from his policies.
Saurymper argues biotech stocks, especially small and mid caps, will continue to rally as well as healthcare equipment and providers, while the weakest performers will be in the pharma names.
He says: “As before the elections, the pricing pressures on healthcare will continue. So far the rhetoric is good for innovation but we don’t know yet whether Trump will be benign for pharma, in particular.
“A fiscal stimulus combined with tax reforms, which will increase M&A activity among large caps, is reflationary so if rates go up, historically healthcare and pharma will underperform. But biotech and health providers outperform if yields move higher.”