(Bloomberg) — As the U.S. presidential election approaches, investors in Chinese stocks are focusing on the prospects of key sectors that are expected to remain in the White House’s crosshairs, regardless of who wins.

Most read on Bloomberg

From solar panels to electric cars to biotechnology, Chinese companies in some of the world’s fastest-growing sectors will likely continue to suffer from increased trade frictions with the United States, whether Donald Trump or Kamala Harris becomes the next president. That said, investors have become so accustomed to bilateral tensions that raising tariffs, as Trump has threatened, may no longer cause a major shock.

Instead, traders are eyeing additional stimulus measures, which could be approved by China’s legislature at a meeting that coincides with the U.S. vote next week, to counter post-election headwinds and prolong the recovery. the second largest stock market in the world. Any new steps taken by Beijing to support industries critical to the country’s drive to become a high-end manufacturing powerhouse could also revive optimism.

“The Chinese government has a lot of tools at its disposal depending on what actions might be taken by the United States,” said Martin Dropkin, head of Asian equities at Fidelity International. “We must always go back to basics and think about which sectors offer the most opportunities for organic growth and the most positive profits in the future.”

Here are some of the sectors closely watched by traders in the run-up to the US elections:

Solar

Chinese solar companies, which dominate the global market, have been a key point of contention between Beijing and Washington in recent years. American competitors complained that their Chinese counterparts were selling their products at a loss to gain a competitive advantage.

Such scrutiny, along with historically low prices, have weighed on the stock prices of Chinese solar makers, including Trina Solar Co. and Xinyi Solar Holdings Ltd., for much of the past two years. They saw a rebound earlier this month following reports that the United States was considering reducing tariffs on the sector. Expectations that Beijing would tackle oversupply of a key material have prolonged the rally.

Still, Trina Solar remains down 10.8% this year, while Xinyi Solar lost 16%.

Solar stocks are “far too cheap,” with some falling nearly a fifth of their valuation from their 2022 peak, said Park Soojin, a China stock analyst at Mirae Asset Securities Co. “Stocks are breaking through the trough with expectations of a rebound in demand and easing of vicious competition.

Electric vehicles and batteries

Chinese electric car makers are also at the forefront of the US-China trade conflict. President Joe Biden’s administration has quadrupled tariffs on electric vehicles made in the Asian country, bringing them to more than 100%. Just this week, the European Union also imposed higher tariffs, peaking at 45%, on electric vehicles from China.

Behind the punitive measures from the US and EU are fears that China will dominate electric vehicle production with cars that are both cheaper and more attractive to consumers than its peers. Since the introduction of new battery technology in 2020, BYD Co. – China’s leading electric vehicle brand – has gone from being one of many producers in a crowded domestic market to one of the top 10 manufacturers global automobiles.

Shenzhen-listed shares of BYD have soared 54% this year.

“Exports are still the same,” said Ivy Ng, Asia-Pacific investment director at DWS. “Even if we take into account the prices offered by Europe, the margin of certain models remains relatively higher than that which they can obtain in China.”

Batteries used to power electric vehicles are also under US scrutiny, with tariffs on lithium-ion batteries reaching 25%. Lithium-ion batteries not intended for electric vehicles will experience the same jump in 2026.

The world’s largest maker of electric vehicle batteries, Contemporary Amperex Technology Co., has limited exposure to the United States. Its shares are up 52% ​​since the start of 2024.

Biotechnology and health

Chinese biotech companies, from WuXi AppTec Co. to MGI Tech Co., are under pressure over concerns about a U.S. bill aimed at blocking such companies from accessing federally funded contracts.

The Hong Kong-listed shares of WuXi AppTec, which gets more than half its sales in the United States, have fallen about 35% this year, with those of MGI down 41%.

Meanwhile, a surprise 50% duty on Chinese-made syringes and needles also hit Shandong Weigao Group Medical Polymer Co., sending the stock down 36% since the start of 2024.

However, the overall risk of the sector appears limited.

“The majority of large Chinese healthcare companies have a relatively small percentage of their sales coming from the US market, with the exception of contract research organization players who we expect will continue to be under pressure regardless whoever wins the election,” said Jialin Zhang, a healthcare analyst at Nomura. .

Semiconductors

Chinese chipmakers have become surprise survivors of increased U.S. efforts to limit China’s ability to compete in strategic sectors.

Despite years of tariffs, export controls and financial sanctions imposed by the United States, President Xi Jinping is making steady progress to enable China to dominate the industries of the future. The leader’s recent remarks that science and technology should be at the forefront of China’s modernization have added to this optimism.

Semiconductor Manufacturing International Corp. has surged 62% this year, while fellow Chinese chipmaker Cambricon Technologies Corp. more than doubled.

–With the help of Katia Dmitrieva.

Most read from Bloomberg Businessweek

©2024 Bloomberg LP