By Carol Ryan

Non-smoking, teetotal Donald Trump is no fan of cigarettes, but his presidential nomination still looks positive for tobacco stocks.

London-listed British American Tobacco was up 4% in morning trading. A subsidiary linked to its U.S. business, Reynolds American, was a large donor to the Make America Great Again Inc, or MAGA, super-political action committee.

Reynolds has been battling the Biden administration's proposed nationwide ban on menthol cigarette. The measure was delayed earlier this year; Trump's victory increases the likelihood that it will be permanently scrapped.

Menthols make up more than a third of the U.S. cigarette market by volume. BAT, Marlboro-maker Altria and Imperial Brands all have sizable U.S. menthol businesses.

Tobacco investors may also expect Trump to crack down on illicit imports of disposable vapes. These products, which mainly ship from China, have been the fastest-growing corner of the U.S. nicotine market. A ban could boost tobacco companies' e-cigarette brands.

It's not all positive, though. Expectations of a stronger dollar under a Trump presidency are particularly unhelpful for Philip Morris International. The company reports in dollars but makes around 90% of its sales in other, primarily emerging market, currencies.

And if Trump's policies stoke inflation, this could harm tobacco stocks, which are heavily exposed to price-sensitive, low-income consumers.

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(END) Dow Jones Newswires

November 06, 2024 08:00 ET (13:00 GMT)

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