Investing.com -- President-elect Donald Trump's promised changes to energy and environmental policies could have significant implications for investors, according to Nigel Green, CEO of deVere Group, a large independent financial advisory and asset management organization. Trump is expected to sign up to 25 Executive Orders on his first day in office, January 20, which could cause major shifts in energy markets.
Trump's campaign promises included reversing environmental regulations and boosting domestic fossil fuel production. These changes could materialize quickly after his inauguration. At a recent rally in Phoenix, Trump confirmed his intent to sign a series of executive orders affecting energy policy on day one. These orders could repeal Biden-era restrictions on energy production, end the electric vehicle mandate, cancel the natural gas export ban, and reopen the Arctic National Wildlife Refuge (ANWR) in Alaska for drilling.
Trump's team also plans to launch a government downsizing initiative, the Department of Government Efficiency, to further cut regulations. These changes could lead to a revival of fossil fuel industries, including coal, natural gas, and oil production, particularly in Alaska. The reopening of ANWR, one of the world's largest untapped oil fields, could significantly impact global energy markets.
Green notes that these changes could provide a lucrative opportunity for investors in traditional energy stocks. Oilfield services, exploration and production companies, and infrastructure firms could benefit significantly as regulatory constraints are eased. Additionally, Trump's focus on energy independence could boost investments in 'midstream' energy companies, including pipeline operators, as new projects receive expedited approvals.
While Green didn't name specific companies, Halliburton (NYSE:HAL) is an oilfield services company seen as a beneficiary by other analysts.
However, investors should also prepare for potential volatility in renewable energy sectors. Trump's rollback of climate-focused initiatives, such as subsidies for electric vehicles and renewable energy projects, could undermine growth in these areas. Firms reliant on federal incentives may need to recalibrate their strategies. International trade dynamics, especially in critical minerals for renewable technologies, could shift dramatically if tariffs or export bans are introduced.
Green advises investors to reassess their exposure to sectors that could benefit from Trump's pro-energy agenda while also mitigating risks in potentially vulnerable areas. Diversification and proactive adjustments to asset allocations will be key. The deregulation of fossil fuels, combined with incentives for domestic energy production, could drive a renewed bull market in traditional energy stocks. At the same time, the renewable energy sector may face turbulence, requiring investors to tread carefully.
Green also emphasizes the importance of exploring emerging opportunities in infrastructure. As energy projects ramp up, there will be increased demand for construction, engineering, and logistics services to support this growth. These sectors could provide new avenues for strategic investments.
However, Trump's energy-focused executive orders could face legal and regulatory challenges, potentially delaying implementation. These uncertainties add a layer of complexity for investors. Geopolitical factors must also be considered. Policies aimed at boosting domestic energy production could alter international trade dynamics, particularly with key energy-exporting nations. This could lead to shifts in oil and gas prices, further impacting global markets.
Green concludes that Trump's incoming administration is set to cause a major shift in energy policy, presenting a pivotal moment for investors. He advises investors to prepare now, before these changes begin to impact markets. Those who act quickly can position themselves to capitalize on the opportunities while sidestepping the risks that come with such dramatic policy shifts.
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