Triumphant Trump puts infra in the limelight

The wanting state of America’s infrastructure was one of the rare issues that united both of the two favoured candidates in this year’s US presidential elections.

Donald Trump last night put the topic again in the spotlight after a campaign that spent little time talking about infrastructure.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it,” he said in his victory speech, pronounced shortly after winning enough electoral college votes to become President-elect.

What projects would be covered by his ambitious roadmap and how they would be financed was not specified, which perhaps was to be expected in an address that also had to convey his wishes to reunite the country, his magnanimity to losing rival Hillary Clinton, his thanks to supporters and other plans he had in mind to help him “renew the American dream”.

His previous attempts at addressing the subject provide few additional clues on his future infrastructure policies, however. As is evident in his victory speech, it is not clear whether he plans to use them as a short-term employment booster – traditionally a democrat argument – or a way to make the economy more efficient in the long term.

While democrats had pledged to bridge the infrastructure financing gap through the creation of a national infrastructure bank, Trump has said he wants to spur private investment in projects through tax credits – a plan described as spurious by a number of experts.

The exact amount allocated to revamping America’s infrastructure has not been clearly worked out either. Clinton’s programme called for $250 million in direct federal spending to be plugged into projects, plus $25 million of seed funding for the national infrastructure bank. Trump simply said he would “at least double” whatever his rival was ready to put on the table.

While the president-elect’s first words as victor sent a positive note to the infrastructure industry, their vagueness may do little to reassure investors after elections that produced America’s biggest political upset in modern history and provided little insights in winner’s economic policy.

“Trump’s victory is expected to lead to ongoing weakness in global trade and deterioration in the US trade deficit from its current position of 2.5 percent of GDP to over 4 percent of GDP by 2020,” said Matthew Peter, chief economist of QIC, the Australian asset manager. “By 2030, the US economy would be forecast to be 2.4 percentage points smaller, in real terms, due to Trump’s policies.”

A silver lining may be the result’s effect on infrastructure stocks, most of which have proven resilient amid broader market plunges in Asia and Europe. London-listed HICL and INPP were down only 0.18 percent and 0.16 percent at 2pm GMT today, for example, while 3i Infrastructure actually up 0.31 percent.