Wall Street girds for life under Mamdani, worries about New York City’s competitiveness-awdailynews

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2025-11-06

Wall Street girds for life under Mamdani, worries about New York City’s competitiveness

By Lewis Krauskopf and Saeed Azhar

NEW YORK (Reuters) -Wall Street braced for change with the election of Democratic Socialist Zohran Mamdani as New York City mayor on Tuesday, a win set to reverberate through the heart of global capitalism, with financiers worrying the city’s competitiveness and business appeal could suffer.

Investors were also analyzing state governor races, saying decisive Democratic victories in Virginia and New Jersey could signal renewed strength for the party against President Donald Trump’s Republicans ahead of 2026 midterm elections. The passage of a California redistricting proposal could hand Democrats more seats in Congress next year.

Mamdani’s win “will be an interesting experiment and we’ll see how much he tries to really change New York City,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. Looking collectively at the New York City, New Jersey and Virginia elections, Ghriskey said, “It’s a fairly strong mandate against the administration in Washington.”

Republicans hold the presidency and majorities in both the Senate and the House of Representatives. If Democrats retake control of just one of those chambers next year, Washington gridlock could ensue, making policymaking more predictable – an outcome investors have often favored.

Democrats may be emboldened to stand firm on the ongoing U.S. government shutdown and negotiate harder on cryptocurrency legislation and energy permitting reform, Brian Gardner, chief Washington policy strategist at Stifel, wrote in a note on Wednesday.

NEW YORK AFFORDABILITY CAMPAIGN

Mamdani focused his campaign on affordability. His agenda includes a rent freeze for rent-stabilized apartments, free bus services, universal child care and city-run grocery stores. He has proposed hiking taxes on New York City’s wealthiest people and raising the corporation tax.

New York’s mayor has no direct oversight over Wall Street, but the role plays into perceptions of whether the city is business-friendly.

“We are seeing a brand-new day in New York City,” said David Funk, executive director of the American Real Estate Society.

“There would be real concern about the real estate housing industry’s appetite for significant investment in New York,” if Mamdani does pursue his promised rent controls, Funk added.

While many investors and financiers say they sympathize with the affordability issues Mamdani has raised, they expressed broad misgivings about his tax policies.

“When I look at the economics around the cost of living in New York City and when a one-bedroom apartment in New York City is $5,000 a month, that’s unsustainable,” Phil Blancato, chief market strategist at Osaic in New York, said after the results. “But when you think about the increase in taxes at the small-business level, corporate level … that has a significant impact.”

HOPE FOR MODERATION

Some financiers hope Mamdani will moderate his positions. Others expect his agenda will quickly confront roadblocks.

While the mayor has power to advance policies affecting property owners, renewable energy, and immigration, Mamdani’s most transformative proposals, including raising taxes and wage floors, and freezing rents, are beyond unilateral mayoral control, Jefferies analysts wrote in a note late Tuesday night.

A Mamdani win is “a risk I’m watching in 2026,” Dean Lyulkin, CEO of Cardiff, a private investment firm and small-business lender in San Diego, California, said ahead of the election result.

“Actual policy often turns out much more benign than campaign rhetoric, but if other major cities follow this pattern, markets may start pricing in more tax and regulatory risks,” Lyulkin said.

Some finance heavyweights, including investors Bill Ackman and Dan Loeb, funded efforts to defeat Mamdani, whose chief opponent was Andrew Cuomo, the former Democratic New York governor who ran as an independent.

Other Wall Street leaders are focusing on how to work with him, and Mamdani has been engaging with business leaders. He spoke with CEOs in meetings organized by the Partnership for New York City, whose members include Wall Street banks, private equity firms and law firms, according to the organization’s CEO Kathryn Wylde.

Yasser Salem, CEO of OneNYC, an independent expenditure committee that backs Mamdani, said last week he is assembling an advisory council of business leaders to work with Mamdani if he prevails.

Mamdani spokesperson Dora Pekec said the mayor-elect’s affordability agenda is good for the economy, as the child care provision will help businesses, with employees willing to remain in their jobs.

“It’s important that we have high quality of life for New Yorkers so that they want to keep starting businesses here,” Pekec said.

POTENTIAL WASHINGTON GRIDLOCK

Analysts said other races, including in Virginia and New Jersey, offer insight into how Americans are thinking about the shutdown and which political party is to blame.

The most critical win for Democrats’ House hopes, however, came in California, when voters approved a ballot measure to allow state lawmakers to adopt a new congressional map that could net the party as many as five new seats.

Betting website Polymarket shows a 72% chance of Democrats winning the House next year.

Analysts at Deutsche Bank said in a research note on Wednesday that the elections gave an early sign of “an anti-incumbent party swing ahead of the midterms in a year’s time, even if one has to be cautious in the read across from state to federal elections.”

Jamie Cox, managing partner at Harris Financial Group, said the election was a “very big wake-up call for Republicans.”

(Reporting by Lewis Krauskopf; Additional reporting by Saeed Azhar, Matt Tracy, Siddharth Cavale, Maria Tsvetkova, Laura Matthews, Davide Barbuscia and Suzanne McGee; Editing by Megan Davies, Leslie Adler, Mark Porter, Rod Nickel)

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