Uncertainty surrounds whether Donald Trump or Kamala Harris will become the next president, but evidence suggests the election could revitalize financial transactions. This potential uptick is promising for major banks such as Citigroup (C, Financial), Goldman Sachs (GS), and JPMorgan Chase (JPM).
Historically, election years have seen mergers and acquisitions (M&A) activity dip in the third quarter, followed by a rise in the fourth quarter. According to Mergermarket, this pattern held true in three out of the last four election cycles, with exceptions during the 2008 financial crisis and the 2020 pandemic.
Despite a slight year-over-year decline in overall M&A activities, investment banking divisions within large banks remain robust. Citigroup and Goldman Sachs reported an increase in investment banking fees by 44% and 20% respectively, following JPMorgan and Wells Fargo's reports of 30% and 37% growth last week.
Analysts believe that regardless of whether Harris or Trump wins, the political environment for significant deals will improve. President Biden's administration is known for its stringent antitrust enforcement, led by Lina Khan and Jonathan Kanter. Business leaders speculate that Harris may ease this approach, potentially replacing Khan. This view is supported by Democratic donors like LinkedIn co-founder Reid Hoffman.
Some large tech companies could welcome changes to antitrust enforcement policies. Lina Khan has challenged deals that other chairs might have approved, including lawsuits against Amazon (AMZN) and Meta Platforms (META), and blocking the Kroger-Albertsons merger.
While Republican factions criticize big tech, Trump's potential administration might replace Khan, despite her antitrust views aligning with some conservative perspectives. Beacon Policy Advisors notes that if Harris does not win, it's unlikely Khan and Kanter will remain in their roles.
Trump has not clarified his antitrust plans, leaving the future regulatory landscape uncertain but potentially more attractive to Wall Street traders if Khan is replaced, as suggested by Beacon Policy Advisors.
