Trump’s Return Sparks Renewed Interest in Oil and Chinese Stocks

Nikolay Stoykov, Managing Partner at Alaric Securities on ‘Business Start’

The oil sector has suffered from a lack of investment over the past five years due to expectations of widespread adoption of electric vehicles. This adoption is now slowing down, and Donald Trump’s return to the White House is making investments in oil companies attractive once again. Oil will likely continue trading around its current levels over the next five to ten years, with low volatility and a gradual, steady softening of demand. This was commented on by Nikolay Stoykov, managing partner at Alaric Securities, on the ‘Business Start’ program with host Hristo Nikolov.

‘I am allocating funds primarily toward oil industry stocks. My assumption is that in the next ten years, oil will continue trading at these levels. If this turns out to be correct, investing in oil stocks, given Trump’s presidency, offers one of the best risk-to-reward ratios over the coming years.’

This includes both oil exploration and drilling companies as well as those serving the industry, Stoykov said. I’m not even counting on an increase in profit multiples—at a certain point, the lowering of interest rates itself makes investments in companies that aren’t growing significantly more attractive,’ he added.

Another investment opportunity arising with Trump’s new term in the U.S. lies in certain Chinese companies, Stoykov believes. The Chinese economy is quite large, with many companies well-managed and highly respected by analysts.

‘People avoid [Chinese stocks] because, in his first term, Trump was very aggressive toward China. Current expectations are overly strong and may lead to disappointment,’ Stoykov noted.

However, it’s worth considering Trump’s threats of new tariffs on Chinese goods, so it’s advisable to choose companies like Tencent and Alibaba, which are more focused on the domestic Chinese market and less dependent on exports, he added.

Many of these companies are performing at the same levels as in 2019, but their valuations are now three times lower, which makes them attractive for investment.

‘I expect the Chinese economy to return to a more normalized level,’ and that the actions of Trump’s new administration against Beijing will be less severe than stated, Stoykov concluded.”

What to expect from the U.S. securities market and which attractive European companies to watch can be seen in the video. ( Bulgarian language only)

*This discussion is for informational purposes only and should not be considered as financial or investment advice.