The 2016 U.S. Presidential election is just over two months away and there are four main candidates running, Donald Trump, Gary Johnson, Hillary Clinton and Jill Stein. Clinton is currently holding a lead over Trump, but just a 5% edge. Clinton’s lead increased to 10 percentage points and has a 45% to 35% edge against her competitors.
Consequently, there’s a high probability that Clinton could be the next U.S. President. Therefore, a lot of her statements have pull. Now, we’ve seen this in the biotech market most recently. According to binary options broker, Stern Options, this can have major implications as the elections near.
For example, Hillary Clinton has been voicing her opinion and is largely against price gouging in the biotechnology and pharmaceuticals industry. Democratic Presidential candidate Hillary Clinton’s tweets have caused biotech and pharmaceuticals to fall and those invested in these industries should proceed with caution.
Clinton Wants Lower Drug Prices in 2016
As we saw in 2015, Clinton’s tweets carry a substantial amount of power. This is still the case in 2016. Clinton added to the pressure of pharmaceuticals and biotech industries, which have been underperforming the S&P 500 Index as of September 9, 2016.
The S&P Biotechnology Select Industry Index is down 12.90% YTD and the Nasdaq Biotechnology Index is down 17.62% YTD. Now, one could argue that some investors are selling their shares because Clinton becoming the next president could be a reality. Therefore, she may move to change legislation, which could hurt these industries.
Any statements that Hillary Clinton makes about the pharmaceuticals and biotech industry should send stocks in those industries into a frenzy. For example, Clinton most recently tweeted and issued statements about Mylan’s significant price hike of the EpiPen, an allergy treatment used widely around the world.
Clinton tweeted on August 24, 2016 at 2:02 PM ET and wrote, “EpiPens can be the difference between life and death. There’s no justification for these price hikes.” Clinton’s comments solidified her stance on the pharmaceuticals industry, noting that she may move to change legislature if she is elected in the upcoming U.S. Presidential election. Clinton’s plan to address price gouging in the drug industry has shaken the industries.
This caused leading biotech and pharmaceuticals stocks to suffer losses, in turn, this caused a substantial drop in the Nasdaq Biotech Index. The index fell from 3098.47 at the close of August 23, 2016 to a low of 2,986.97 on August 24, 2016, over a 3% drop. Consequently, IBB fell from $296.18 to $286.23, a 3.35% in just one day. As of September 9, 2016, IBB is down 17.54% YTD and 18.95% over the past year.
Mylan N.V. (NASDAQ: MYL), the company that raised the price of EpiPens, suffered a major one day drop due to Clinton’s tweet. The stock lost 5.41% of its market value in just one day. In just seven trading days, as of September 1, 2016, Mylan lost 8.05% of its market capitalization.
Mylan’s stock price is still getting hammered in early September 2016. The stock is down 26.23% YTD and may continue to succumb to the selling pressure that was caused by Hillary Clinton’s tweet.
Clinton’s Strengthening Campaign
Clinton’s campaign has been gaining traction and more people are donating to her efforts. Clinton raised $143 million in August, for her campaign, the DNC and state parties. Consequently, this should increase her lead in the polls leading up to the election. The campaign donations will allow Clinton to reach millions of voters across the U.S. and, perhaps, convince many Americans to vote for her.
According to Stern Options Analyst, Anthony Di Maggio, he believes U.S. Presidential Candidate Hillary Clinton will increase her lead over Donald Trump, Gary Johnson and Jill Stein in September. Di Maggio also noted that investors should be gearing up and consider taking off some positions in the biotech and pharmaceuticals industry because there is a high probability that Clinton may become U.S. President. Therefore, she may move to increase regulations in those industries, causing them to lose value.