Infrastructure super-cycle on Wall Street; Morgan Stanley believes these sectors could benefit

Apart from the benefits of the physical infrastructure that would be created using this, Michael Zezas, Head of Public Policy Research and Municipal Strategy for Morgan Stanley believes the money flow could also aid Wall Street.
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Wall Street could soon benefit from the massive infrastructure spending being planned by the Joe Biden administration. The $2 trillion infrastructure plan, unveiled by the White House few weeks ago, is aimed at improving and building new infrastructure across the United States. Apart from the benefits of the physical infrastructure that would be created using this, Michael Zezas, Head of Public Policy Research and Municipal Strategy for Morgan Stanley believes the money flow could also aid Wall Street. Michael Zezas in the last Morgan Stanley podcast talks about various sectors that stand to benefit from this infrastructure super-cycle. 

“One obvious place to look is at cement and steel companies. With a plan to spend about $1 trillion on transportation, water and affordable housing, that’s a lot of steel and cement that will be put to use,” he said. Steel stocks such as Rio Tinto, Nucor, and Wheaton Precious Metals have surged over 5% each in the last one month. Similarly, other building material stocks have galloped higher in the last one month.

Further, Michael Zezas said that the clean energy sector also stands to benefit. “Another area that benefits is the clean energy sector – something recently highlighted by our utilities and clean energy analyst Steven Byrd,” he said. Joe Biden’s infrastructure plan proposes extensions of key tax credits for the sector, new tax credits and methods for developers to immediately realise their value, and over $170 billion to support the development and production of electric vehicle technology. 

Zezas added that not only will the companies that produce clean energy benefit, but also the ones that manufacture the equipment that produces clean energy could see a jump. 

Lastly, a key segment of the healthcare sector is understood to be in line to gain from the infrastructure push. Analysts at Morgan Stanley believe that the White House is signalling that its plans will include an expansion of the Affordable Care Act subsidies, and a possible lowering of the Medicare age. “Our collaboration with health care analyst Ricky Goldwasser on the impacts of such policy changes suggests there could be a fundamental positive from these policies for larger healthcare providers. That’s because while the government may be doing more healthcare business, and at lower margins, there would be more health care business to do overall, and the larger companies would have the scale to engage profitably,” Michael Zezas said.