British homebuilding shares rose on Friday after Labour’s landslide victory in the UK general election, with the sector one of four others likely to benefit from a victory for centre-left parties, Interactive Investor said.
Labor Party in Gained 211 seats on Thursday, giving them control of 411 of the 650 seats in parliament. With the end of 14 years of Conservative rule, Labor leader Keir Starmer has become the country’s new Prime Minister.
“It’s still early days and some analysts are wondering whether the scale of its victory might give the new government more hope than Labour’s relatively timid manifesto,” David Prosser of online investment platform Interactive Investor said in a note on Friday. Bold confidence.
Prosser said fund managers were starting to identify certain stocks that would benefit from a Labor government, and here are five sectors “feeling the glow of a Labor victory”:
construction
Residential construction stocks rose on the London Stock Exchange, with Vistry Group (OTCPK:BVHMF) rising 3.4% and Taylor Wimpey PLC (OTCPK:TWODF) rising 2.8%. Elsewhere, Barratt Developments (OTCPK:BDPF) rose 2.4%, Persimmon (OTCPK:PSMMF) rose 2.2%, and Berkleley Group (OTCPK:BKGFY) also rose 2.2%.
Labor has pledged to build 1.5 million new homes within the first five years of the party’s government, subject to reforms to planning laws. Simon Murphy, fund manager at VT Tyndall Unconstrained UK Income, told Interactive Investor (II) that the outlook for housebuilders and the wider construction industry was “very encouraging in the medium term”. Murphy’s portfolio includes Vistry Group, Breedon Group (OTCPK:BRDNF), Howden Joinery Group (OTCPK:HWDJF) and Kier Group (OTCPK:KIERF).
consumer and retail
II’s Richard Hunter said consumer-facing stocks should rise on the back of “post-election feel-good factors” along with better economic news, including a possible rate cut from the Bank of England. Primark owner Associated British Foods (OTCPK:ASBFY), retailers Next (OTCPK:NXGPY) and Marks & Spencer Group (OTCQX:MAKSF) are on his list of likely beneficiaries, as well as building materials company Travis Perkins (OTCPK:TVPKF) .
renewable energy
II said Labor had been widely criticized for downplaying its commitment to investing in decarbonisation and transitioning to green energy. But Labor plans to create GB Energy, a listed company aimed at promoting increased private sector investment in wind, solar and other sectors.
infrastructure
“Infrastructure investors are hoping that the new administration will find the resources to inject significant capital into the country’s crumbling transportation and utility networks as well as new digital projects,” Prosser said. Investment partner J. Stern & Co. told II it buys shares in Xylem Inc. (XYL), saying the water technology company will benefit from investments in the UK water industry.
banking
Labor is planning additional taxes on parts of the financial services industry, but Tony Gibb, director of investment solutions at Artemis, told II that “greater political and policy stability would be good for the industry.”
ETFs focused on the UK include (EWU), (FKU) and (FXB).