Investing.com -- The decisive Donald Trump victory is set to add fuel to the capital markets recovery, Wells Fargo (NYSE:WFC) said Thursday, expecting a less regulatory burden on transactions to help boost mergers and acquisition as well as private equity activity.
"Trump victory likely adds extra fuel to the capital markets recovery fire. We expect less regulatory scrutiny on transactions," Wells Fargo said in a recent note, expecting large caps to benefit as well as bank M&A and a greater level of activity from PE.
The bank expects the market to price in part of its upside scenario, with alternative asset managers, M&A independent advisors, wealth managers, and traditional managers set to benefit, in that order of preference.
The stronger capital markets backdrop is seen as a positive for performance fees and capital markets revenues, and would likely provide a boost to alternative asset managers like Carlyle Group Inc (NASDAQ:CG), KKR & Co LP (NYSE:KKR), and TPG (NASDAQ:TPG).
Wells Fargo also flagged Evercore Partners Inc (NYSE:EVR), and Stifel Financial Corporation (NYSE:SF) as potential winners among its key tactical picks amid less regulatory scrutiny.
But not all firms are expected to benefit equally.
Lazard Ltd (NYSE:LAZ) could lag on a relative basis, Wells Fargo said, as tariffs add uncertainty to cross-border M&A, while a a stronger dollar also poses a headwind to international strategies.
While the overall outlook is positive, Wells Fargo cautioned that an ongoing market rally "could weigh on organic growth and pressure already low cash levels as investors stay nearly fully invested."
"The shifting interest rate curve also introduces some uncertainty," the bank added.