President elect Joe Biden has revealed a US$1.9 trillion healthcare and economic plan to try to help the Unites States of America.
What are some of the highlights from the plan?
The $600 stimulus cheques that were in the first package that congress agreed will be increased to US$2,000 per person. Not only is the payment going to be increased but it will be available to more households which were originally excluded. Adult children, and households where families have one immigrant parent, will also get the payment. This apparently means that at least 10 million more people will get the payments.
Tax credits will also be extended for children and lower income workers.
There are other measures including 14 weeks of paid sick and family medical leave for millions of employees. Grants will be provided to over 1 million small businesses. There will also be low interest loans made available, particularly for clean energy investments.
There’s also more funding for things like food stamps, food and water assistance and funding for US territories like Puerto Rico.
He also plans to step up the rollout of the COVID-19 vaccines.
What could this mean for ASX shares?
As a whole, there aren’t too many ASX shares that have a big involvement in the US. However, ASX shares do take on market movements from the US – so market sentiments there can affect things here. Increased stimulus is one of the main reasons why the US share market has done ever since investors learned that Joe Biden won the election.
To a lesser extent, I think we could see an increase in the profit of mostly discretionary businesses in the US, like we’ve seen in Australia with companies like JB Hi-Fi Limited (ASX: JBH), Adairs Ltd (ASX: ADH) and Nick Scali Limited (ASX: NCK).
There are a few smaller businesses on the ASX that give exposure to that sort of US retail theme like City Chic Collective Ltd (ASX: CCX), Lovisa Holdings Ltd (ASX: LOV) and A2 Milk Company Ltd (ASX: A2M).
Businesses that operate in the US which could benefit from an improving vaccine rollout include CSL Limited (ASX: CSL), Audinate Group Ltd (ASX: AD8), Aristocrat Leisure Limited (ASX: ALL), Brickworks Limited (ASX: BKW), James Hardie Industries plc (ASX: JHX) to name just a handful.
‘Green’ investments could also benefit from the Biden Administration, which may be why the Australian Ethical Investment Limited (ASX: AEF) share price has jumped in response.
Summary thoughts
Most of the time politics doesn’t have much of an effect on profit or share prices. But considering the US is dealing with a big pandemic and a lot of economic pain for certain segments of the country, Biden’s plan could give some ASX shares a material boost.
Of the ones I’ve named in the article, I think I’d be most inclined to buy City Chic because it’s already a business on my watchlist. Though Audinate and Brickworks are other ASX shares that could do well from an improvement in the COVID-19 situation.
