Finance and Economics APP learned that after wind energy and solar energy stocks plunged within hours of Trump winning the election, asset management companies are now focusing on a green transformation sector, stating that this sector will ignore the incoming president's anti-ESG agenda: power grids.

One day after the election, analysts at Morgan Stanley told clients that the power grid and the equipment needed to build it are now among the 'best-positioned sub-industries' for energy transformation.

This call has paid off. Since the election on November 5th, a key stock market indicator measuring power grid equipment has risen by about 6%, while the broader and more extensive S&P Global Clean Energy Index has dropped by about one-tenth. A significant portion of revenue from Asian and European suppliers to the American market has also rebounded, with Japan's Hitachi Ltd sponsored ADR seeing an increase of over 8% during the same period.

Fund managers say that investing in American electric power and power grids is a way to avoid the tariff impact on other industries. With Trump's protectionist policies seemingly forcing more manufacturing back to the USA, the demand for energy in the US will soar, adding to the reasons for investment.

"We are very bullish on the demand for electrical utilities in the United States," said Ran Zhou, portfolio manager at New York-based hedge fund Electron Capital Partners LLC, "related to this is long-term carbon-free energy."

Since the election on November 5th, the stock prices of companies developing power grid equipment have risen, including Eaton (ETN.US), Rockwell Automation (ROK.US), and Ametek (AME.US), all of which have seen gains of over 6%. Emerson Electric (EMR.US) has risen by over 7%.

Even before the US presidential election, companies related to electrical utilities had outperformed other areas in the green industry. The NASDAQ OMX Clean Edge Smart Grid Infrastructure Index rose by 20% last year. Asset management companies interviewed indicated that, driven by Trump's tariffs, the larger scale of US manufacturing seems to be sparking a new wave of growth in American electric power stocks.

Trump clearly stated that he hopes to repeal the unused funds in the Biden administration's landmark climate law, the '2022 Deflation Reduction Act.' His support for fossil fuels has triggered panic among green investors, who are concerned that Trump's presidency will hinder the development of US wind power projects.

However, at the same time, the incoming president promises that American companies can access affordable electricity. Analysts suggest that this would not be possible without the construction of renewable energy sources.

US energy policy is undergoing changes, while demand is experiencing a historic surge. Consulting firm Wood Mackenzie estimates that the US is facing the largest energy consumption growth in decades, with energy consumption in some regions expected to increase by 15% over the next five years.

Most of this demand will come from technology companies building datacenters to drive the development of artificial intelligence. In recent months, Amazon (AMZN.US), Google (GOOGL.US), and Microsoft (MSFT.US) have each announced nuclear energy trades to power their operations with carbon-free electricity.

Analysts at Morgan Stanley stated in a report released on the second day after the US election that current estimates of the renewable energy market 'have not yet considered the further changes in renewable energy demand from the datacenter market.'

Under Biden's leadership, the development of the electric grid has received over $30 billion in government support. In May of this year, US regulators finalized relevant regulations, implementing the largest industry reform in at least a decade to accelerate grid construction.

Jerry Goh, the Chief Investment Officer of Abrdn Plc, stated that in the next two to three years, grid upgrades will benefit global equipment manufacturers. He added that this is because of the insufficient production in the USA and the further increase in equipment 'backlogs,' making it quite a significant narrative.

The expected PE ratio of the Nasdaq Electrical Utilities Index is currently 20.3 times. Although this valuation is relatively high compared to global benchmark indexes, it is still close to the ten-year average level. Compilation data also shows that the EPS growth rate for the next year will be around 11%.

Yi Shi, portfolio manager of Pictet Asset Management, stated that the company's clean energy transformation fund had already invested in companies catering to the needs of the American electrical utilities sector before the election, and currently has no intention to withdraw funds.

Shi said, "We not only focus on overall valuations, but also on potential profit growth."